Tuesday Tip: Apple Watch – Buy Now?

by Tony Rushin

Apple announced more information yesterday on the Apple Watch. There are a lot of places on the web that provide specific information; my favorites are listed below. For this article I want to focus on one question: Should I buy the Apple Watch now?

That’s the question I’ve been asking myself. While doing my research over the last 24 hours I settled on five main criteria that helped me answer that question for myself:

1. Are you an over-the-top Apple fanatic?
2. Are you a watch collector (think fashion)?
3. Do you have $1,000 laying around that you won’t miss?
4. Is your time valuable enough that saving 2 minutes / day would be worth it?
5. Do you already own an iPhone 5 or 6?

Before we get into scoring yourself on each of the 5 criteria, let’s consider this question: is the Apple Watch more like the iPod, iPhone or iPad?

Apple Watch: More like an iPod, iPhone or iPad?

There were digital music players prior to the iPod. However, the combination of the iPod (the platform) plus iTunes (the distribution) resolutionized the music industry. Like most revolutionary products, it took a while to catch on. The iPod was announced on October 23, 2001 and the 1 millionth unit was sold in June, 2003. After that sales really took off: through 2004 a total of 10 million iPods were sold and through 2007 a total of 141 million iPods were sold.

The iPhone is a phone like the Apple Watch is a watch. Yes, you can put the iPhone up to your ear and make a phone call; however, calling it a “phone” is misleading. Likewise, you can put the Apple Watch on your wrist and use it to tell time. However, calling it a watch doesn’t do it justice. In that sense, the Apple Watch is similar to the iPhone. They are both in categories of devices – phones and watches – that are ubiquitis in the marketplace, yet they take those devices to a completely different level. Sales of the iPhone ramped more quickly than the iPod. It first went on sales on June 29, 2007 and only took 74 days to sell the 1 millionth unit. Through 2008 a total of 16 million iPhones were sold and through 2013 a total of 430 million iPhones were sold.

Like the iPod entering the existing, but small, market of digital media players, the iPad entered the existing, but relatively small, market of tablets. I must admit that when the iPad was announced on January 27, 2010 I thought it had missed the mark. I couldn’t see why Apple was so excited about it; I thought it would only appeal to a small, specialized niche. Yeah. Don’t take investment advice from me either. Granted, when the iPad was announce, Apple already had back-to-back blockbuster hits with the iPod and then the iPhone. The iPad started shipping on April 3, 2010 (can you believe it was less than 5 years ago?) and took only 28 days to sell 1 million units. By the end of 2010 a total of 15 million iPads were sold and through the end of 2014 a total of 246 million iPads were sold.

So what’s the verdict? I think the Apple Watch, from a market standpoint, is most similar to the iPhone in that it’s entering a big, ubiquitis market (wrist watches) that has existed for a long time with something that really isn’t a wrist watch. However, from a sales perspective, it will be most similar to an iPad: entering the market on the heels of excellent predecessors plus having to achieve sales without subsidies (the old-school iPod had to stand on its own too while the iPhone sales price was typically subsidized by the wireless carriers.

Bottom Line: I’m predicting the Apple Watch will get off to a fast start (after all, there are a lot of Apple fans out there) and will probably break the iPad’s record by selling 1 million units in less than 28 days. Then, sales will moderate until the product category matures some more and will take off when the Apple Watch 2 is announced in September, 2016 (you read it here first).

Score Yourself on the “Buy Now vs. Buy Later” Quiz

Okay, now back to answering the main question: Should I buy the Apple Watch now? Let’s score ourselves against the five criteria I proposed earlier. For criteria #1 thru #4 use a scale from 1 (not so much) to 10 (absolutely!). For criteria #5, give yourself a “-10” if you don’t own an iPhone, a “0” if you own an iPhone 4 or previous, a “5” if you own an iPhone 5 (any model) and a “12” if you own an iPhone 6.

As an example, here is my own personal score plus fictitious scores from (mostly) imaginary characters I’ll call “Bob” and “Sally”.

1). Are you an over-the-top Apple fanatic?

• Tony: 6 ~  I like Apple products, but when I wake up at 2:30 AM to buy the gold iPhone 5S I’m really just having fun.
• Bob: 9   ~  I’ll stop just short of camping out to buy whatever new gadget Apple is selling.
• Sally: 6  ~ I use an iPhone and an iPad as productivity tools but I love them one day and curse them the next day.

Note: if you gave yourself a “10”, go immediately to the closest Apple store and start waiting in line.

2). Are you a watch collector (think fashion)?

• Tony: 1 ~  Nope.
• Bob: 3   ~  No, but I do like nice things.
• Sally: 2 ~  Are you kidding?

3). Do you have $1,000 laying around that you won’t miss?

• Tony: 1 ~ Are you crazy? We just became empty nesters and my wife has let me know that our “Brady Bunch” house needs a serious makeover.
• Bob: 5 ~   I used to until I started my own business in 2007 (bad timing). I’m confident that I will again five years from now but as for now… not so much.
• Sally: 6 ~ The company is doing well but I’ve put a lot into it over the last several years. There are no big hunks of money laying around that I haven’t already put to good use.

Note: If #1 or #2 is an “8” or higher, and #3 is a “9” or higher, get online on April 10^th and preorder an Apple Watch: a stainless steel model ($549 to $1,099). Alternately, hire a college student to wait in line for you to buy it on opening day.

4). Is your time valuable enough that saving 2 minutes / day would be worth it?

• Tony: 8   ~ My times pretty valuable and I’m always looking for ways to get more organized and gain a competitive advantage.
• Bob: 9   ~   Time is money. That’s why I love the other Apple products.
• Sally: 10 ~ Two minutes / day is 10 minutes / week; 43.3 minutes / month; 520 minutes / year (almost 9 hours)! Is this a trick question???

5). Do you already own an iPhone 5 or 6?

• Tony: 5 ~  Yep; a gold iPhone 5S (gold is best).
• Bob: 12 ~  Are you kidding? Of course I have an iPhone 6… Plus.
• Sally: 5 ~  I’m not sure. It’s not the latest but it’s not real old. I dropped my previous iPhone into Lake Lanier in the summer of 2014… no, it was 2013. So what’s that mean? I think I have an iPhone 5.

If you scored:

40+ and you have an iPhone 6, buy an Apple Watch now!

30-39 and #4 is a “9” or higher and you have an iPhone 6, do more serious research; it may be worth it for you to buy an Apple Watch now.

1-29 wait for the Apple Watch 2 to come out

Here are those links I promised earlier; use it to learn more of the specifics about price, positioning, availability, applications, etc.

Recap of Tim Cook’s announcement

Article by Geoffrey Fowler, WSJ

Good, brief overall summary

Excellent, pro-Apple summary article with decent detail

Good perspective from a BuzzFeed Reporter

Smartwatch: Elegant Evolution

Apps

Focus on the mundane; not the hype

Apple Watch versus the competition

I’d love to know: are you going to buy an Apple Watch in April or are you going to wait?