Apple Watch Has No Time for Operators

For its latest device, Apple appears to have called time on its dealings with mobile operators. Launched to predictable ballyhoo on Monday, the new Apple Watch will hit retail stores in nine countries at the end of April. Unlike the iPhone and the iPad, however, it will not be sold through the likes of AT&T and Telefónica. At least, that looks to be the case, judging by the information that has flowed from Apple so far.

What seems clear is that customers will pay a one-off fee, starting at $349 and passing the $10,000 mark for those who like a bit of gold-plated wrist bling to go with their Gucci shoes. It connects over WiFi and Bluetooth and needs to be synched with an iPhone 5 or a later model to work properly. Cellular is not in the frame.

In other words, there is no real upside for the operator community. Watch customers will not pay monthly subscription fees to their service providers for the privilege of using Watch features. Perhaps the best operators can hope for is that Watches overtake iPhones on the popularity scale, persuading consumers using lower-cost smartphones to upgrade to pricier iPhone subscriptions. That seems improbable, although attachment to the Watch might help to reduce iPhone churn.

The Apple Watch is clearly not the only wearable device that cuts operators out of the deal in this way. But operators may be disappointed nonetheless. After all, it was Apple Inc. (Nasdaq: AAPL) that shone a light on the mobile data market when traditional handset makers had left them groping in the dark. If any player was going to help them "monetize" wearables, it was surely Apple.

Of course, the smartphone industry had been fumbling for several years when Apple came along. Consumers have only just started trying on wearables. There seems little doubt that future "Internet of Things" devices will rely on 4G and even more advanced cellular technologies for connectivity. Indeed, one of the big attractions of 5G is that it will spur the development of new IoT products and services by reducing latency and providing additional capacity for a welter of connected gadgets. (See Growth of the 5G Ecosystem, 5G Visions Dazzle at MWC, 5G Use Cases, Pre-Standards Groups Proliferate and TeliaSonera Preps Multi-Country VoLTE .)

Want to know more about 5G? Check out our 5G content channel here on Light Reading.

That does not mean consumers will pay a separate monthly subscription for each connected gadget, though. Operators might convince their customers to part with a few more dollars each month for a smart watch or tracking device, but there is obviously a limit to the amount of disposable income the average person can or will spend on communications services.

A likely scenario is that operators will sell a bundle of wearables for a fixed monthly fee. Claudia Nemat, Deutsche Telekom AG (NYSE: DT)'s Europe chief, hinted as much in an article recently published on the German operator's website. "If we are all going to have five or even ten such wearables in the future, then the simplest thing will be to have one contract with a single service environment that users can activate on all their devices with just one click," she said. (See Deutsche Telekom Says Europe Risks Being 5G Flop.)

Persuading Apple to be a part of this "service environment" will be a tough sell, but it seems inconceivable the iPhone maker will not have some kind of wearables relationship with operators in future. A 4G-enabled Watch could be sold to iPhone-less consumers through service providers, or bundled with iPhone subscriptions for a slightly higher fee.

Many companies developing wearable gadgets hope the Apple Watch will have a galvanizing effect on the industry. If that happens, operators will quickly need to work out how to make wearables fit as comfortably as possible.

For more information, see Apple Watch to Hit Shops on April 24.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

Page 1 / 3   >   >>
MordyK 3/16/2015 | 2:21:23 PM
Re: Who will offer the cellular connectivity? Derek,

As I was reading the comment thread I couldn't help but largely agree with your comments. But I had a few additional thoughts I decided to add.

While I believe that most devices will mesh their RF and rely on a single "gateway" device - such as the smartphone or home router-gateway - for "backhaul" to upload data to the cloud, there will be about 10-15 percent that will require direct carrier modules. The carrier modules will largely be the old M2M and telematics market's, which are more widely deployed and require a wide area radio network to communicate with their host server.

As a rule of thumb I think carriers need to take a step back and look at the connectivity chokepoints to explore the type of connectivity gateway opportunities available. Examples include the home (wired), mobile (cellular) and auto (cellular), with other gateway chokepoint for various environments. Based on that they need to figure out what additional roles they'll play that are not strictly the radio interface.

The second point I'd like to address is the need for power. The power issue affects everything related to wireless, from product design considerations to daily charging habits or the annoyance of running out of power.

This issue will be the biggest hurdle for connected devices. The solution is for a long-range wireless charging technology like uBeam or Witricity to be embedded in mobile devices and wireless access points, that will passively charge devices when in range and bill the electicity costs to their home electricity bill or the carrier bill.

Until the power issue is resolved satisfactorily the costs to maintain IoT modules will be its achilles heel and hinder its true promise.
Susan Fourtané 3/16/2015 | 1:15:30 AM
Re: They made a trade-off Thanks, Kruz. I had completely forgotten about Glass. -Susan
Kruz 3/15/2015 | 12:44:21 PM
Re: They made a trade-off @ Suzan: the project was stopped for the time being and Google is reinventing it in a way.So no Glass for the moment.
Susan Fourtané 3/15/2015 | 6:15:10 AM
Not everything has to be cellular Ian, It makes perfect sense to me that the Apple watch connectes only through WiFi and Bluetooth. Honestly, not every device has to be cellular as well. -Susan
Susan Fourtané 3/15/2015 | 6:12:14 AM
Re: They made a trade-off Kruz, I had already forgotten about Google Glass. What ever happened to it? -Susan
Susan Fourtané 3/15/2015 | 6:10:42 AM
Re: They made a trade-off mhh, I have a Gucci watch. Only authorized dealers can open it and replace the battery, or clean it, especially when the guarantee is still valid. It makes sense to me that the same will happen with the apple watch, especially the high-end model, as I said before. I wouldn't like my expensive smartwatch to be opened ny anyone, if I had one. I see people are complaining too much already about a product that is not even on the market. -Susan
Susan Fourtané 3/15/2015 | 6:01:49 AM
Re: They made a trade-off Ariella, all the high-end watches come with a warning and only authorized dealers can open them, especially during the guarantee perod. Why would the Apple watch in this same line would be different? The special edition is not a plastic cheap watch. -Susan
Kruz 3/15/2015 | 4:18:57 AM
Re: They made a trade-off @KBode: absolutely, Technology has to evolve to be less intrusive and be part of your daily life rather than having you reach out. But until Google Glass lookalikes succeed with some brain wavelet mechanism, the way things are here to stay.
Ariella 3/14/2015 | 8:28:11 PM
Re: They made a trade-off " but I suspect Apple won't let just anyone open up the Apple Watch case." I'm sure you're right about that. There would probably be a warning only to bring it into authorized dealers.
KBode 3/14/2015 | 11:17:09 AM
Re: They made a trade-off Actually I'm more into unobtrustive heads up displays (integrated into contacts or glasses) that I think I am the smart watch.

Again, make the watch battery life a week or longer, bring the price down a bit and show me some innovative, compelling uses, and I'm more likely to bite. As for the style, I actually like the design of the Moto watch a bit more.
Page 1 / 3   >   >>
Sign In