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Apple's New Job: Selling a Smartwatch to an Uninterested Public

Apple's New Job: Selling a Smartwatch to an Uninterested Public

By Brian X. Chen, The New York Times | Updated: 2 March 2015 09:54 IST

For Apple, the hard part - making a smartwatch - is nearly over.

Soon it will be time for the harder part: selling the long-anticipated Apple Watch to consumers who, so far, are not very excited about the idea of wearing computers on their bodies.

The first batch of smartwatches from companies like Samsung Electronics, Motorola and LG did not sell well, nor were they particularly well reviewed. And wearable devices like the Google Glass eyewear that got mainstream attention - if not sales - were greeted with considerable skepticism.

But Apple has been in this situation before. Most consumers didn't care about computer tablets before Apple released the iPad, nor did they generally think about buying smartphones before the release of the iPhone. In both cases, the company overcame initial skepticism.

The Apple Watch, which Apple introduced in September and is expected to be in stores in April, is a miniature computer worn around the wrist, with a touch screen and a crown for navigating the device. There are three different models sold at different prices, and the bands are interchangeable.

Apple has marketed it as a device that can appeal to a range of customers like fitness buffs and luxury watch collectors. But it has limited its functions, making it more like a watch, more easily relatable than a tech doodad that happens to look like a watch, said Ben Bajarin, a consumer technology analyst for Creative Strategies.

"This is a brand-new category. Most people have no frame of reference with a smartwatch," Bajarin said.

In late February, Apple sent out invitations to the media for an event to remind people about the best features of the watch and share some new details about the product, according to two people with knowledge of the event. Tim Cook, Apple's chief executive, is expected to be the host.

Apple is expected to say more about price. The starting price for a basic Apple Watch is $350. Apple has not yet said how much people will have to pay for higher-end models, like the Apple Watch Edition, which is made of 18-karat gold, although watch enthusiasts estimate that it will cost upward of $10,000.

The watch requires a connection to an iPhone to fully operate.

Inside Apple, members of the team that worked on the watch product, code-named Gizmo, say it was a difficult engineering challenge. Three employees briefed on the project agreed to speak on the condition of anonymity.

In an effort to maintain secrecy, engineers testing the watch outside the office even created fake casing that made the Apple device resemble a Samsung watch, one person said.

The people who created the watch have been described by Apple employees as an "all-star team." Apple's top designers and engineers who worked on its iPhone, iPad and Macs are all part of it, several Apple employees said. Top executives include Jony Ive, Apple's head of design; Jeff Williams, the head of operations; and Kevin Lynch, a former Adobe executive, who leads the watch's software development.

Employees said it was challenging to cram powerful chips and sensors onto the watch's circuit board, which is as tiny as a postage stamp.

Nearly two years ago, the company experimented with advanced health monitoring sensors that tracked blood pressure and stress, among other variables. Many of those experiments were abandoned more than 18 months ago after the sensors proved unreliable and cumbersome, these people said.

Apple long ago decided that for the first version of the product, it would include a heart rate sensor and a sensor for tracking movement, to market the device as a fitness-tracking companion to the iPhone. It also has a chip that helps it make wireless payments.

Battery life was also a concern on a device so small, and engineers mulled over how the watch's power should be replenished. The company in the past experimented with multiple methods to recharge the watch, including solar charging. Eventually it settled with induction, a method in which an electrical current creates a magnetic field, which creates voltage that powers the watch.

Apple has said the watch battery is estimated to last a full day, requiring a user to charge it at night, similar to a smartphone. The company also developed a yet-to-be-announced feature called Power Reserve, a mode that will run the watch on low energy but display only the time, according to one employee.

Apple will release the watch a bit later than it had hoped because of technology challenges. It probably didn't help that several important employees jumped ship. Nest Labs, the smart appliance maker that was acquired by Google last year, poached a few engineers who were the very best on the watch team, according to two people. Among them was Bryan James, Apple's former director of iPod software, who became a vice president for engineering at Nest in early 2014, these people said.

Still, when Apple releases its watch in April, it will enter a market already flooded with smartwatches running Android Wear, a version of Google's Android software system tailored for wearable computers.

The results so far for Android smartwatches have been disappointing. About 720,000 smartwatches with Android Wear were shipped in 2014, according to Canalys, the research firm.

Daniel Matte, an analyst for Canalys, said based on those numbers, it would be premature to call smartwatches a flop. He also predicts Apple's watch will become the top-selling smartwatch next year.

But it is unlikely to be a game-changer for Apple, at least anytime soon. Toni Sacconaghi, a financial analyst for Sanford C. Bernstein research, thinks the watch will make only a modest contribution to Apple's bottom line this year. He predicts that Apple will ship 7.5 million watches in the second half of Apple's fiscal year.

That is peanuts compared with the tens of millions of iPhones that fly off the shelves every quarter.

Companies that make watch apps will probably play an important role in defining the purpose of the Apple Watch, similar to the app developers for the iPhone and the iPad.

Tero Kuittinen, a director for Frank N. Magid Associates who does consulting for app developers, said he had talked to about 20 app developers about the Apple Watch. Most of them, he said, were "cautiously optimistic." But they worry apps for watches won't be as lucrative as apps for phones because the tiny screen can limit features or - even worse - ads.

David Barnard, an independent app developer, said he was expanding one of his iPhone apps to work with the Apple Watch. The app, called Launch Center Pro, can be customized to initiate different actions like setting the temperature of an Internet-connected thermostat or unlocking a door.

He said he was both "bullish" on the long-term potential of the smartwatch and "skeptical" about what exactly people would do with it.

"I really wonder exactly how I'm going to use it and how often I'm going to use it," Barnard said.

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