People are balking at the price of the Apple Watch — up to $US17,000! — and questioning whether there will be a real market for them. It doesn’t work unless you also carry an iPhone, and they’re expensive. A gold Apple Watch Edition may be technologically obsolete in a couple of years, like an iPhone 4. Who knows if you will be able to keep that $US17,000 trinket updated?
But Apple Watch will be huge, for one obvious reason. Apple has once again launched a product that markets itself through product signalling.
Product signalling is an extremely important part of the way products become widely adopted and Apple is a master at it. Here is how it works:
A huge part of getting people to buy a new product is to have the product advertise itself by repeatedly signalling its presence to others until it feels like “everyone” around you has one of these things except you. The best non-tech example of this is Corona beer. There is no reason for a lime to be in the top of a bottle of Corona. But ever since Grupo Modelo figured out that you sell more Corona if bartenders put limes in the top, limes and corona have gone together. It works because when a customer sees someone else getting a bottle with a lime in it for the first time, they say “what is that? And can I have one too?” A Corona with a lime in is distinctive. If you get any other pint of beer in a glass, there is no way for anyone to tell what brand you’re drinking.
Apple has a history of marketing via product signalling. When the iPod launched, it had white earbuds and wires. Until then, headphone wires were mostly generic black. The white wires and buds signalled to everyone, “Hey, I have an iPod.” Getting your own white wires was like joining a visual club. Not having white wires announced, “I don’t have an iPod. I have a sad, off-brand music player.”
After a short time, everyone had white wires coming out of their ears.
The iPhone was an extension of this. When the iPhone launched first launched in 2007, it was easy to figure out who owned a new iPhone — because those people told you about their new iPhone every five minutes. One of the reasons people were able to do that was because the phone had a lot to talk about. Messages! Photos! Apps for things! The device signalled its presence because there was so much for users to talk about to their friends.
But the iPhone has stopped signalling its presence. Everyone has a smartphone now. The iPhone isn’t that distinctive anymore. When I switched from iPhone to Samsung’s massive, white Galaxy Note 4 I was surprised by how much more strongly the Note signalled its presence than an iPhone. As I said at the time, one cool thing about the Note 4 is that if you want to draw attention to yourself, just pull it out of your pocket and plunk it down on the table in any social setting. It’s so massive, it just stops the conversation right there. It’s like sitting at a bar in a Hummer.
Now, any wearer of the Apple Watch will be checking it repeatedly, or get notified via alerts to check it repeatedly, so that everyone around them will know they’re wearing an Apple Watch. Apple Watch wearers will instantly become the most annoying people in meetings at work because they won’t be paying attention — they will be checking their wrists and signalling the product to everyone else around them. Your PowerPoint is boring. I have an Apple Watch! (Prediction: some companies will make headlines when they ban the watches from meetings.) Early adopters will function like free ads. Later adopters will make it feel like “everyone” has one. And the very late adopters will be constantly reminded that they are just that — late to the party.
The Apple Watch actually has a built in signalling device that will enhance its sales. The Digital Touch function lets users send a pulse signal, their heartbeat, to a “friend.” And by “friend” obviously we’re talking about lover. This is an extra added bonus: The heartbeat signal is a great couples gift. Every time one sends the heartbeat signal to the other, attention will be drawn to the watch, which will then do its job as a self-ad. Other couples will then be pressured into getting watches as love gifts. After all, if you really loved me, you’d have bought me an Apple Watch like Joe and Joanne over there, right? Not these lousy flowers!
The genius of all this is that while the Apple Watch is signalling itself and advertising itself all over the world, it will be dragging iPhone sales behind it. You can’t use the watch without the phone, in much the same way as you couldn’t use the iPod without a Mac and iTunes. So if you’re buying one you’re buying the other.
That’s why Apple Watch will be at least as important as the iPod was at its peak to Apple sales. Cantor Fitzgerald estimates 20 million units will be sold in the first year. The iPod routinely sold 20 million units per quarter at its height (usually in Q4, for Christmas).
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