On Apple Watch, China and the FBI

Apple, Switzerland, China, Apple Pay, Apple Watch and the FBI

Apple, China, APple Watch, FBI, Switzerland, wearables

As I previously predicted, Apple has taken a big chunk out of the Swiss watch industry, smartwatch users are abandoning conventional time pieces, and Tim Cook’s already figured out a plan to help Apple Watch 2 succeed.


China is essential to the next Apple Watch. Apple’s decision to launch Apple Pay services in China last week will likely have a significant impact, particularly as the company plans to extend what Apple Pay can do. Think about it and it’s already reasonable to predict Apple Watch sales will spike in China now the killer app for Apple Watch is available. 

Apple has already sold over a million Apple Watches in China. When it comes to Apple Pay: "We think China could be our largest Apple Pay market," Apple's vice president of Apple Pay, Jennifer Bailey previously told Reuters.

The combination between smartwatch and mobile payments is compelling. With this in mind it matters that Strategy Analytics analyst, Neil Mawston says: “Mainland China and Hong Kong combined will become the world’s largest smartwatch market by 2017.”

Strategy Analytics claims 8.1 million smartwatches were sold in Q4 of 2015, an estimated 5.1 million of these being Apple Watch. Sales of traditional Swiss watches fell 5 percent year-on-year, to just 7.9 million.


The latest report from the Federation of the Swiss Watch Industry revealed Swiss watch exports fell 7.9 per cent year-on-year. “An unfavourable environment continues to hold back results in the sector,” it said.

It is important to note that before the smartwatch, China had also become the biggest market for the Swiss watch industry.

“The Swiss watch industry has been sticking its head in the sand and hoping smartwatches will go away,” Mawston said. “They are way behind…”

Smartwatch sales are expected to hit 50.4 million units this year, “Largely due to Apple popularizing wearables as a lifestyle trend,” said Gartner.

To fight back Swiss manufacturers will adopt two key strategies: the first will be to continue to create beautiful mechanical watches, the other being to introduce technologically versatile connected devices. However, Swiss watchmakers are not software developers so it seems most likely we’ll see partnerships, such as the newly announced team up between Acer and Victorinox.

In future we will find out if such partnerships can better Apple's offer in the space. Apple Watch users already abandoning traditional watches and customer satisfaction rankings revealing “very high” levels of happiness among users. This initial satisfaction and the stimulus of enabling Apple Pay services in new markets means Apple is likely to attract strong interest in the next generation Apple Watch when it is introduced.

However, all sales expectations must be tempered by accepting that economic and political instability is beginning to undermine consumer confidence on a global basis.


Swiss watchmakers have one hope: the FBI.

You see, at present most smartwatches and other connected devices rely on smartphones to operate. However the FBI wants Apple to build technologies that could effectively be used as a back door into an iPhone, which also becomes a portal into any connected device.

If the FBI prevails in its demand (and looking at the political weathermap it seems possible it may) then every security service in the world will demand similar access.

Effectively this will mean when you wrap an Apple Watch (or any connected device from any manufacturer) around your wrist you will also be wearing a tracking and bugging device liable to being accessed by every security service in the world on your arm. I'm not sure that's something people want.

That’s why the FBI v Apple encryption case in the US is so important. The future of technology, Apple, customer privacy and connected industry depends on the result, which is why Apple CEO, Tim Cook is pleading the US reigns in its current attempt and forms a panel to figure out a better approach.

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Copyright © 2016 IDG Communications, Inc.

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