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The wearables industry needs to brace itself for the Apple Watch

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Since the launch of the iPod, Apple's either dominated or come close to dominating every industry that it has entered. The only market where the company isn't the world number one is in set-top boxes, a field that has always been described as a "hobby." It's not too much of a risk to think that Apple will do to watches what it's already done to personal audio, smartphones and tablets -- even if global success isn't overnight. What then, for everyone else in the world of wearable technology?

Design

Apple, along with the recently announced Pebble Time, is swimming against the current when it comes to hardware design. If you were sitting in the room during Google I/O '14, you'd have felt a palpable wave of excitement when the Moto 360 was unveiled. The world's first circular smartwatch with an LCD display instantly blew the "squircle" shaped Gear Live and G Watch into the margins. From this moment onward, companies were desperate to demonstrate that their watches were more "watch-like" than the competition. Now, almost every company in the space is doing its best to shed their geeky image in the hope of garnering some love from the mainstream.

The world's first circular smartwatch with an LCD display instantly blew the "squircle" shaped Gear Live and G Watch into the margins.

In the last six months, we've seen products like Withings' Activité, the Huawei Watch and LG's G Watch Urbane all try to ape traditional watches. Good aesthetics aside, it's also good business, since these devices have one eye on appealing to the sort of consumers who would ordinarily be putting down $5,000 for an Omega Seamaster.

The Apple Watch Edition is destined to do similar, drawing the eye of rich executives and millionaires away from their traditional Swiss mainstays. Given that the premium Apple Watch can cost up to $17,000, it wouldn't take too many user defections, presumably from Rolex to Apple, before Switzerland's profits began to tumble. Apple's chief designer Jonathan Ive himself is quoted by The New York Times as saying that the country would be "in trouble," when his wearable launched -- although the designer reportedly used a slightly stronger, six-letter expletive while doing so.

Several of the country's smaller outfits have, belatedly, woken up to the idea that technology companies are muscling in on their turf. Three lesser-known brands, Mondaine, Alpina and Frédérique Constant, are pushing against this by adding basic activity tracking to a new series of smartwatches. Launching under the MotionX banner, the watches include activity tracking, goals, alerts and sleep monitoring as standard.

Battery Life

It's a good rule of thumb that if a smartwatch has less than, say, three days of battery life, it was made by "mobile" people. If it has a life greater than seven or so days, then it's more likely to have been made by a watch company. Startups specifically entering the smartwatch market, on the other hand, normally feel that a week is roughly what users will be able to live with. You can tell that the Apple Watch sits firmly in the former camp, with an expectation that you'll charge it on a daily basis. Of course, given that it's a product designed by Ive, you'll probably expect to charge it once every six hours.

Companies have to work out the best trade-off between battery life and features.

In all honesty, the technology required to make a smartphone for your wrist already exists. Unfortunately, the power necessary to make it work for long periods of time is so great that your whole wrist would be covered by a battery. Companies have to work out the best trade-off between battery life and features, such as Apple's decision not to include the energy-heavy GPS in its wearable. A few devices have tried to do all of these things at once, but they wind up looking a lot like the Neptune Pine.

Despite big advances in low-power wireless technology (step forward, Bluetooth 4.0 LE) enabling watches to use a cell battery to talk to your phone, no one's really cracked the power issue. Until then, we'll all have to ration our time spent noodling away at our smartwatches. After all, we'd hate to get into a situation where Mophie-style smartwatch batteries are a thing we all have to buy.

Fitness

It's only a limited sample set, but the runners we've spoken to all seem to despise having to take their phone in hand or in an armband. Since all they need is a GPS tracker and a music player, it's a lot more convenient, and less of a theft risk, not to carry around a $700 smartphone in their hand. Apple isn't particularly germane to these complaints, however, and so if you want GPS tracking and coaching, you'll have to bring your iPhone along for the ride.

Historically, the first device that combined GPS and music playback was Motorola's Motoactv, but few others have followed in its stead. Sony's SmartWatch 3 and the Adidas Smart Run both offer the option, but it's not available on any other Android Wear device. Right now, it's not clear if the Apple Watch will help to set customer's expectations as to what a smartwatch will do, but if it does, then you can expect to see a lot fewer wrist-based activity trackers on store shelves. After all, it'll be hard to convince people to spend $250 on a Fitbit Surge when, for not much more, you can get a fully featured smartwatch.

Money

People are barely aware that they can buy things with their smartphone, and now they're about to learn that they can do the same with their watch. It's in the mobile payments space that Apple has an ostensible lead over its rivals, since Apple Pay has plenty of support from banks, entertainment outfits and even the federal government. The company's Eddy Cue has already revealed that the Watch will be able to leverage your iPhone's payment information and authentication.

By comparison, you can only make purchases from your Android Wear device right now with a lot of extra work. For instance, you'll need to create barcodes in Google Wallet, crop them in Aviary and then push them to Google Keep to make them work. Of course, that only works where retailers have code-scanning equipment, so until Android Pay arrives, the rest of the field is behind the curve.

So, Why Make a Watch At All?

It's easy to assume that smartphones have made watches obsolete, and it's kind of weird that Apple is making a watch. After all, this is a company that produces forward-looking devices, right? If TVs are too old-fashioned for its team to bother with, then why bother with the ultimate old-fashioned device? There are plenty of quotes hinting that the company is only doing it because Ive is a "watch guy" and would risk losing him if they didn't indulge his vanity project. Others believe that the device is a me-too product in response to a wearables industry that has started to build a market without Cupertino. The truth, however, is that making a watch is one of the most logical business decisions the company could make.

Swap out Switzerland for Finland, and Swatch for Nokia, and you could almost believe it was 2007 all over again.

Squint a little and the wearable market looks similar to the mobile phone market before Apple launched its first smartphone. Taking a look at StatisticBrain's latest report on the wristwatch industry, around 1.2 billion watches are sold each year. There's a small cluster of successful European companies, mostly based in Switzerland, that earn billions for their high-end watches. In the same location, the world number one makes watches for rich and poor alike, while China and Japan produce dirt-cheap mass-market alternatives. The average cost of a Chinese watch, for instance, is just $3. Swap out Switzerland for Finland, and Swatch for Nokia, and you could almost believe it was 2007 all over again.

You may have noticed that we're talking about watches rather than smartwatches, and there are two reasons for that. Back in October, Asymco's Horace Dediu (not a man to bet against) wrote that Apple isn't targeting smartwatch users, but, instead, everyone who owns a wrist. That is why the company has branded one product three ways, to appeal to low-, middle- and high-end buyers who want an Apple-branded watch. The highest tier, the "Watch Edition," is being spoken about as a potential rival for the Rolexes and Omegas of this world. After all, most consumer electronics don't get cover spreads on the front of fashion magazines.

It'll be a slightly fairer fight between Switzerland and Apple than its technology rivals have achieved so far. In 2014, only 720,000 Android Wear devices were shipped and it took until February 2015 before the millionth Pebble was sold. That just about rings true with the Consumer Electronics Association's research claiming that around 2.4 million smartwatches were sold in 2014. Presumably, the leftover 700,000 is the size of the fitness wearables market, including Fitbit, Withings and others. The CEA is expecting 2015 to be a bigger year, predicting 10.8 million units being shoved out the door, and it's pretty obvious who is expected to make up the most of that number. It should be an easy thing to achieve, since Apple only sold around 6 million units of the first-generation iPhone in its first four quarters of life.

In many ways, Apple's decision to announce the Watch before Christmas helped to guarantee a slew of pent-up demand. After all, those impatient users who were going to finally splash out on a new wearable were encouraged to wait just a few more months before deciding. If you thought that Apple could guarantee lines of people outside its stores for the annual update cycle of the iPhone, just wait until the first day of the Watch.

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