iWatch Apple’s share price with concern

Apple’s iWatch will bomb terribly.

The logic of the iWatch, unconfirmed but due for release in 2014, is this: “People like watches, and people like smart-phones, so…”

Ask yourself, how much wearable technology do you have on right now? Wearable technology reminds me of those beer hats.

Image from dakkadakka.com.

Objects that do two things at once rarely do anything well. That’s why we don’t eat dinner with a Swiss Army knife. In fact, it’s why we have a whole block full of knives, each one subtly optimised for a different task.

The iWatch runs against several major trends.

1. The death of skeuomorphism.

Skeuomorphism is making computer programs look like the real world. It’s why your email logo generally looks like an envelope, why your note-taking app dedicates pixels to representing leather stitching, or why the numbers on your clock app flip over like an old pre-digital device.

The latest iPhone release eviscerated Skeuomorphsim. Gone were 3D shadows and all the rest in favour of an operating system that was computer-optimised.

But now Apple is taking the concept up a level. The interface looks sleek, but the product itself is a throwback. Is it inspired by some sort of will to make the future exactly what the science fiction authors expected? That doesn’t always work.

A fossil

2. Watches are not for telling the time

We spend all day in front of screens that show the time. Mac: top right. Windows” bottom right. In our pockets another machine does the job.

Reportedly, 85 per cent of watch revenue comes from watches priced at over $500. Are these wealthy people deprived of computers?

No. If we wear a watch it’s like a peacock’s tail or a Porsche Cayenne, a signalling device that says the following:

“I’m really bloody rich and important.”

3. Screen size.

The new HTC MegaFone is four foot across and comes in a backpack!! Okay not really. But that’s the direction of the trend.

Trying to use this thing for typing is going to be a nightmare. Watching videos on it will be trying. The average email will require ten scrolling gestures to read.

Another fossil

4. It doesn’t solve a real problem

Unlike adding a camera to a phone, a wrist strap doesn’t provide much value.

I don’t hear anyone talking about the hassle of carrying a phone around, or the frustration of having to reach into your pocket to get it out.

Neither do people bemoan the absence of things to put on their wrist. Just a third of Gen Y normally wears a watch.

At best, a “smartwatch” might allow the vain to empty their pockets and preserve a svelte silhouette. But the extant smart watches have to be “paired” with a phone. So that benefit does not exist. Crazy.

If a watch is the best idea smartphone makers have left, then the revolution in smart phones that began with the iPhone is over, and commoditisation is about to turn into a raging wildfire that will reduce profit margins to ashes..

Apple shares are trading at $554 today, up over 40 per cent from their 2013 low of $385, but well off its historic peak over $702 in September 2012.

In April 2012 I reported warnings about Apple and called the tech sector “frothy”. That article contains share price charts for Nokia and Nintendo that show the dangers for companies in fast-evolving technology markets. One bad product could be enough to change market sentiment about post-Jobs Apple.

Confession – I don’t wear a watch.

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Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

2 thoughts on “iWatch Apple’s share price with concern”

  1. I wouldn’t disagree with anything you wrote except I don’t think Apple is that stupid. They have had some technology and design mis-steps but what you are envisaging is a turkey of Microsoftian proportions – something akin to their revolutionary confutable which has taken the world by storm.


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