September 10, 2014 I was pretty down on Apple Watch yesterday. I was really expecting something far more revolutionary. It had no real surprises in terms of tech other than perhaps not having any connection capability of it’s own at all, making it a simple accessory for the iPhone rather than a freestanding device. The more I’ve kicked it around though, I think the long term play for the Watch becomes apparent. It’s the successor (in a business sense) to the iPad. It’s widely known that iPad sales have gone flat and are likely to decline. People keep iPads longer than phones because they’re not subsidized and are simply less critical/useful for most people than a phone. Now, enter the era of the 5.5” phone. Many folks will say there’s no good reason to have a 5.5” phone in addition to a 7” or even 9” tablet. The phone does everything the tablet does with only slightly less screen room. Why buy a $700 phone (before subsidies) and a $500 tablet? So what is Apple to do? iPads are already on the slide and now they’re introducing 4.7” and 5.5” iPhones that are only likely to further cannibalize iPad sales. Apple did sell about $100 billion in iPhones last year so they’re not hurting, but to maintain that $500 billion dollar valuation you have to sell a lot of everything. iPhones on their own aren’t enough, the iPhone needs a +1. In this sense the watch, at least on paper, is a great fit. It’s dependent on the phone (for now), but even better it can have an entirely different marketing angle. The problem with the iPad is it really is just a big iPhone. Yes, it’s nicer to sit in bed with your iPad than your 4” iPhone, but it’s not THAT much better. And when you’re phone is 5.5” many people won’t think the iPad is different at all. The watch is nothing like the phone/tablet so there’s already a nice marketing angle as an accessory. Better yet, it’s primarily a fashion item. It’s apparent they’ve put a lot of thought into the metals used and the band system. Really the fashion end of the Apple Watch is more fleshed out than the actual technology end. The huge iPhones are also just less nimble to carry and take out. The iPhone now becomes your base station with the watch as the (first?) satellite accessory. Instead of selling you an iPhone and a big iPhone (iPad), they can focus on the “it does everything” iPhone and the handy and fashionable watch as a nice add on sale. This is actually a pretty interesting strategy. Beyond that, it’s very short sighted to think about it as being about this year. This year means very little. The Apple Watch is all about version 2 and version 3. That’s when it’s really going to shake loose. It will get thinner of course, but also add in those bits it needs to be truly useful such as GPS and probably wifi. The ability to let you untether from the phone at times like when you’re working out or hiking or just running your day around the house. That’s the part I was most disappointed in. V1 needs the phone at all times. A huge 5.5” phone, but by V2 and V3 I’d expect that need to be gone. Sure, you’ll probably need your phone to make calls, but it will be able to work on it’s own for long stretches to map your run, make edits to your calendar and so on. I suspect we’ll also see a lot of outside the box uses. The clip system for the bands looks ingenious. They’ll be clips to hang it off your bike, lock it to your fridge, place it anywhere you might want a phone satellite. Yesterday I wasn’t that excited about the Watch, but today I’ve started to get more interested in the possibilities. Especially for what it may transform into over the next few years, just like the iPhone transformed between version 1 and 2.