Apple debuts discount watch, but no new iPhones ... yet

Apple introduced a cheaper version of its smartwatch, its latest attempt to broaden the appeal of its trend-setting products while many consumers are forced to scrimp during the coronavirus pandemic.

The scaled-down Apple Watch follows on the heels of a budget iPhone the company released five months ago as the economy cratered and unemployment rates rose above the levels reached during the Great Recession more than a decade ago.

Apple also took the wraps off a new high-end watch model, a next-generation iPad, and a couple of new subscription services during a virtual event held Tuesday. The company normally also rolls out its new iPhones at this time of year, but production problems caused by the pandemic have delayed their release until at least October.

CEO Tim Cook didn’t mention iPhones during Tuesday’s one-hour presentation recorded at the company’s massive, but now mostly empty, headquarters in Cupertino, California.

The Apple Watch has never come close to rivaling the iPhone’s popularity, but it does dominate the market for smartwatches. Canaccord Genuity analyst T. Michael Walkley estimates about 51 million Apple Watches will be sold this year, a 5% increase from last year. The research firm GlobalData pegs Apple’s share of the $64 billion smartwatch market at roughly 60%.

The new discount model, called the Apple Watch SE, will sell for $279 and be available beginning Friday. The price is a markdown from the $399 that Apple is asking for the next version of its higher-end watch, the Series 6. Apple watches have been selling for an average of $377, based on Walkley’s calculations.

Apple added more features to help the watch monitor its owner’s health, including a sensor that can read blood oxygen levels. The feature, specific to the Series 6, could be timely, given that COVID-19 frequently attacks the lungs.

Apple also announced a new fitness subscription service tailored for its watches for $10 per month, as well as a new option that will bundle its existing music, video, news, and gaming services into a package that will cost $15 to $30 per month.

Tens of millions of people already subscribe to Apple’s various services, helping the company double its revenue during the past four years within a division that creates products for the more than 1 billion iPhones, iPads, watches, and other devices that the people already use.

The services division also includes Apple’s app store, which is under regulatory scrutiny for charging a commission of up to 30% for products sold through other companies who have no other option but to use the store to reach the most affluent consumers who buy the iPhone products.

A keynote event on Tuesday underscored how the $2tn tech giant is focused on selling subscription services to a wider base of customers, such as a new “Apple One” bundle including storage, games, music, movie streaming, and more. Among its hardware announcements was the Apple Watch 6, starting at $399, which now has the ability to measure blood oxygen levels and can track elevation. It also revealed a mid-priced Apple Watch SE, starting at $279, which can be paid for over 24 months. Series 3, remaining at $199, is still the entry-level watch. For the first time Apple now had a clear “good, better, best” tiering structure for its watch customers, delivering choice at a range of prices, said Leo Gebbie, an analyst at CCS Insight. Apple is already the global leader in smartwatches, with a 40 percent market share in the second quarter, according to Canalys.  Still, only about 10 percent of Apple’s almost 1bn users have an Apple Watch, so convincing customers it was an essential companion to the iPhone or other products was a priority, said Paolo Pescatore, an analyst at PP Foresight. “Apple is extending the proven iPhone segmentation model across categories by having a hero product alongside an affordable option,” he said, pointing to the success of the iPhone SE, an entry-level smartphone first introduced in 2016 and updated in April. Apple is extending the proven iPhone segmentation model across categories by having a hero product alongside an affordable option Paolo Pescatore, PP Foresight A similar strategy is at work for the iPad, a division whose revenue soared by almost a third to $6.6bn last quarter. The iPad comes in four models, with base costs ranging from $329 for a 10.2-inch screen to $999 for the iPad Pro 12.9-inch display. On Tuesday Apple unveiled a revamped iPad Air, which is increasingly positioning as a true replacement for a laptop. The Air, starting at $599, is the first product to feature Apple’s newest “A14 Bionic” chip, will come in five colors, and be available next month. “When you compare the new iPad Air with A14 to the best-selling laptop in its price range — a device almost three times thicker and four pounds heavier — the new iPad Air has up to two times the faster graphics performance,” said Tim Millet, vice-president of platform architecture. Analysts said the strategy behind Apple’s latest hardware launches was about signing up new users for an ever-growing array of services. It services division revenues were $13.2bn last quarter, up 162 percent from five years ago. 

Apple One, unveiled on Tuesday, is a new subscription plan for individuals and families giving monthly access to a variety of Apple services including iCloud storage, arcade games, music, television and movie streaming, and news. The company also announced Fitness Plus, a workout-streaming and health service costing $9.99 a month which looks set to rival the guided health program offered by Fitbit at the same price point. It may also prove a challenge to Peloton Digital, the workout-from-home app that costs $12.99 a month and does not require Peloton’s bike or treadmill. Mr Pescatore called Apple One “a masterstroke” as Apple moves to “drive value from users and the untapped opportunity, families”. Recommended AnalysisThe Big Read Apple: how app developers manipulate your mood to boost the ranking Another service announced was Family Setup, which will allow parents to link multiple Apple Watches to one iPhone, so they can keep tabs on their children. Hubert Palan, chief executive of Productboard, which makes product management software, said this was “an awesome way for Apple to hook more people into their ecosystem”, though it comes at the risk of lower iPhone sales. “Parents who are mostly buying iPhones for their kids to reach them, track them, and keep them safe can now just get them the watch,” he said.  Overall, the challenge for Apple was to showcase new hardware beyond the iPhone without the event feeling anticlimactic, said Jeff Fieldhack at Counterpoint Research, and in this respect, Apple did a “tremendous” job. The pre-recorded event offered no clues about the upcoming 5G iPhone, expected to debut next month, nor did it mention over-the-ear AirPods or a lost-items tracker expected in the near future.

Apple (AAPL) is diving deeper into the fitness business with the debut of its new Apple Fitness+ app for the Apple Watch and iPhone. The service, available for $9.99 per month or $79.99 per year, provides users with guided exercise videos that they can follow along with as they feel the burn. The service kicks off by the end of the year.

Apple’s move puts it firmly in competition with other health-focused companies including Fitbit (FIT), which is in the midst of being acquired by Google (GOOGGOOGL). It could also be a blow to the large subset of fitness-focused iOS apps available through the App Store.

Apple Fitness+ is the company's first foray into fitness services, and will be available for $9.99 when it launches later this year. (Image: Apple)
Apple Fitness+ is the company's first foray into fitness services, and will be available for $9.99 when it launches later this year. (Image: Apple)

Through the app, you can select the workout you want to do, the trainer you want to work with, the time you want to spend on your workout, and the music you want to listen to from your iPhone, iPad, or Apple TV. Your Apple Watch will then begin automatically tracking your workout from calories to time spent and more, and displays the data on the device you’re watching your workout on.

Available exercises will include yoga, cycling, treadmill walking and running, strength training, core workouts, high-intensity training, and more. Many of the workouts require just a pair of dumbbells or nothing at all.

When the workout is over, you get a comprehensive summary that is displayed on the summary screen on your secondary device including calories burned and more.

New workouts are added each week, so you won’t get tired of your new exercise routine.

For those who are getting back into getting in shape, there’s a program that can help people get used to moving properly again.

Apple announced the new Fitness+ service alongside the company’s latest Apple Watches including the $399 Apple Watch Series 6 and its new mid-range Apple Watch SE for $279. New Apple Watch buyers will get access to Apple Fitness+ for free for 3 months.

Post a Comment

Previous Post Next Post