With Series 2, Apple admits its smartwatch isnít for everyone

McClatchy-Tribune Information Services

September 12 , 2016

Two years ago, Apple Inc. executives made the case that anyone with an iPhone would be better off also owning the companyís new smartwatch.

But as many gadget buyers remain unsure about the usefulness of high-tech timepieces, Apple this week pitched its second-edition watch to a much narrower audience.

Workout and activity tracking capabilities surged to the front and center, taking over the spotlight from messaging features and customizable timefaces. The promotional video for the Watch Series 2 featured almost only athletes: swimmers, tennis and basketball players, cyclists, skateboarders and runners.

The shift in approach reflects some major technical changes. The Apple Watch Series 2 has built-in GPS ó essential to athletes who donít want to lug their phones on runs or bike rides ó and is water resistant for use while swimming and surfing.

But establishing the Watch as a fitness tracker rather than a catch-all smartwatch serves a bigger purpose too, analysts said. Thanks to smartphones and popular devices such as the Fitbit, consumers now understand how devices can track steps and monitor sleep. Emphasizing those features make the Watch a more familiar device than the revolutionary communications tool Apple touted in 2014.

The "ultimate device for a healthy life" is how Apple Senior Vice President Jeff Williams summed up the Watch at a media event Wednesday. Two years ago, Apple called the Watch its "most personal device ever."

Apple showcased games, animated messages and other features on stage this week as well, but health and fitness underlined even some of those presentations.

"You get people into the Watch through the guise of fitness, but then you get people messaging and playing games," said Jitesh Ubrani, research analyst at the data firm IDC.

Though Apple hasnít released sales figures, analysts estimates upward of 12 million Watches have been sold since the original incarnation went on sale in April 2015. Some experts say the device suffered from an identity crisis. The deviceís benefits werenít clear and immediate for most.

"Personality disorder is what I would like to call it," venture capitalist and Fitbit investor Om Malik told Bloomberg TV on Wednesday. "Until they figure that out, Fitbit has a clear lead and will maintain a clear lead."

Sharpening the pitch for the Watch suggests Apple may be on its way to reining in aggressive ambitions and figuring out a clearer, albeit smaller, role for the device. Apple did not respond to a request for comment.

"Thereís absolutely a refocus toward fitness," Ubrani said. "Itís the low-hanging fruit."

A faster version of the Apple Watch Series 1 will go on sale next Friday for $269, or about $80 less than the retail price at launch last year.

The Watch Series 2 starts at $369, including a set of wristpieces with unique colors and features designed in collaboration with Nike.

Sports-centric marketing campaigns around the Watch could spur more interest in offerings from Fitbit, Jawbone and other fitness tracker makers. Their wearables generally cost less and have longer-lasting batteries than Apple Watch. Their limited apps havenít turned off consumers, who are satisfied with just having smartphone notifications pushed to their wrist, said Ray Maker, who runs the popular fitness-device blog DCMaker.

The competitors also work in tandem with Android smartphones; the Apple Watch only syncs data with iPhones. And data suggest Appleís rivals have plenty of room to grow as a result. Only about 25 percent of people who purchased a Fitbit online since the start of 2014 also bought an iPhone over the Internet, according to data from receipt tracker Slice Intelligence.

Running and cycling watch companies such as Garmin sell well among endurance sports enthusiasts, but they may lose sales to Apple if consumers find the Watch Series 2 more multi-functional, fashionable and fairly priced.

Some may continue to opt against the Apple Watch because other options are better tailored for harsh-weather and rugged environments, Maker said. Another big problem for many athletes is the battery. The five-hour GPS battery life on the Watch wonít hold up for some marathon runners or any Ironman competitors.

"If youíre training for a marathon or a triathlon, itís likely youíre going to want something that you know will get you to the finish line," Maker said. The Apple Watch battery life is "well below virtually all fitness companiesí GPS watches today on the market."

About 25 percent of wearable devices sold last quarter were Fitbits, with models from Xiaomi, Apple and Garmin following in the low teens and single digits. Fitbitís dominance is expected to continue through the holiday season in large part because demand has been for affordable, lower-tech fitness trackers, analysts said. In other words, for all the robust capabilities of Apple Watch, it might be the simple things that get consumers to consider it.

"It will be a slow transition from basic wearables to smart wearables," IDC research manager Ramon Llamas said.