How much of an impact will the Apple Watch make on the app economy?

George Osborn

In Wearables

April 24, 2015

After months of excitement, speculation and hype, the Apple Watch has finally hit the shelves of stores across the world. Marking the first major new product release for Apple since the launch of the iPad under Steve Jobs, Apple’s first wearable is taking the company and the app economy as a whole into unchartered territory.

But how much of an impact will the Apple Watch make on the app economy as a whole? How will it affect developers, service providers and advertisers? And are we expecting it to reshape the way we interact with the world around us the way the original iPhone did after it launched in 2007?

In the first of what we plan to be a regular series, we contacted a series of experts who form the Business of Apps panel. Charged with using their insight to help our readers out, here are their takes on whether wearables are about to redefine the future of the industry.

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Sascha W. Wischek & Matti RätyFjuul

When Apple Watch was announced it was clear to us at Fjuul that we must have a version of Fjuul running on it. Pretty quickly we had an idea how to serve our users on this new form factor to make the experience more personal and context relevant. Given the smaller screen size and shorter interaction time/session length, this requires developers to really do some ‘soul searching’ on the very core of their respective application value prop.

Designing an application for the Apple Watch is not just putting your iPhone app on it. In Fjuul, we identified specific use cases for the device (as opposed to just mirroring the app UI/UX on smaller screen). Features needed to be something that adapt to what the user is doing in various moments during their daily / casual life. Be it casual activity or jogging, a context aware design will transform the user interface on the Apple Watch to show information that is relevant to the activity user is engaged in and with. We felt it is making Fjuul an ideal companion app on the Apple Watch.

Apple Watch is an opportunity for the application developers to differentiate from others but it also means taking that extra mile in design and development – and quite frankly – even coming up with a new value angle. If developers are able to provide something totally different on this new form factor, they shall get a huge boost in visibility in very crowded application ecosystem.

On the launch, we will most likely see everyone jumping on the bandwagon in one way or another, but after initial rush, only the best Apple Watch applications will remain in the spotlight and keep users retained. Apple Watch support will be a must for certain types of applications for a long time to come – it’s a great opportunity and we are ready and prepared to adopt new things to our app that users eventually just throw at us after having put some mileage on the ‘clock’.

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Ted Nash, TapDaq

Recently, a lot of the developers within our community have spent a lot of time testing on the Apple Watch.

The developers have unanimously said it’s a very impressive device and should open up a lot of opportunity for innovation, particularly in the health, utility and lifestyle category.

I think when you take a high level view of the app economy you can clearly see that I think, in its first release, they have deliberately left some of the functionality of the Apple Watch on the table. At the moment, the watch has to be harmoniously with the iPhone – but if that wasn’t the case, and the Watch was powerful enough to live independently, would the iPhone market continue to be as dominant as it is today? Arguably the Watch could eventually cause a huge amount of cannibalisation.

It’s difficult to judge the impact the Watch will immediately have on the usage of mobile applications, but I think for a number of developers who rely on in-app advertising within their applications to sustain their business – they need to be careful. If you create a brilliant product for the Watch, which does eliminate the need to ever visit the main application, you could unintentionally really hurt your core business.

So, I think as a device, this could have a huge impact on the app economy in terms of monetization. One thing is for sure, mobile advertising on the Watch will be a difficult challenge.

When the iPhone first launched, virtually every app was paid for, and then everyone moved to freemium. With customers spending far less time in the main application, how will developers continue to monetise? That for me is going to be incredibly interesting and perhaps something that has been overlooked by developers who have been so eager to launch their product for the new device.

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James KayeBig Ideas Machine

I am now going out on a limb and putting something into print that can possibly be laughed at in two years time but I’m still really struggling with the entire notion of smart watches and what possible use they have to anyone’s life at the moment?

Having played around with a few, there is no clear discernable ‘must have’ aspect to them and I have quite a Google Glass attitude towards them. In Dragon’s Den style I always think what problem something is solving? What need it is addressing? What is it making better/easier?

The last time I looked I just can’t recall people saying that they needed to squint at a much smaller screen to do something they are perfectly happy doing on their phones (which by all signs seems to be going much more in the direction of large phablets – the very antithesis of smart watches).

Then there is the mere fact that smart watches still need to be tethered to mobile devices to show call alerts and other such things. This is a no win if you think about it. The need to tether the watch to your phone in itself seems silly, but so too is imagining some utopian future in which smart watches are self contained mobile devices and we have to live in a world where people endless die from embarrassment from talking into their wrists Dick Tracy style.

On a semi-serious note, concerns for any useful day to day application asides and the need to simply flaunt pointless tech at people, I think that the Apple Watch and Smart Watches in general need to find a place in our lives and prove their worth.

Of course, developers like Seriously are jumping on the bandwagon with their excellent game Best Fiends to have smartwatch games which is a smart (pardon the pun) move, as the smartwatch app store pages will be crying out for content.

But really, I think most app developers and even advertisers can possibly rest easy for the moment that smart watches will take a while to convince us that they will be moving from a ‘nice to have’ to a ‘must have’ purchase.

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Chen Levanon, ClicksMob

Wearables like the Apple Watch remain new and represent relatively uncharted territory for the world of advertising, but that means all the more opportunity for advertisers and developers. While the Apple Watch is selling quickly, the technology of wearables as it relates to advertising, is still a ways behind mobile.

In the world of mobile advertising, we’ve seen a shift of ad budgets from web to mobile and we don’t anticipate those budgets being channeled to wearables any time soon. Wearables represent a welcome additional channel for advertising, but won’t be compromising web and mobile in the near future.”

However, given time, it is likely that developers will take advantage of the monetization potential of the apps they develop for the Apple Watch. They will, however, have to deal with the challenges of the small screen size which will limit the opportunities.

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Thomas Sommer, AppLift

As it is not a standalone device, there is little chance that the Apple Watch will foster an app economy similar to what the iPhone did. It is rather Apple’s first attempt at positioning themselves in the Internet of Things (IoT) landscape.

Beyond the buzz around the term, I actually see IoT as the natural evolution of mobile. If you go back to its original purpose, mobile is essentially about two things: situation and intent. Today, many surveys show that a vast majority of purchase decisions actually start on a mobile device. If you think about it, this makes sense: people mostly decide or even start thinking about going on a trip when they’re sitting with friends, not when they’re in front of their computer.

Mobile, and IoT, is what connects the Internet to intent in a given situation. The applications are countless! Even if the purchase is eventually made on a laptop, what matters in the end is where the intent first took place. There is no point in getting users to check flight prices in your app if they end up buying their tickets elsewhere. Overall, it will become increasingly vital for marketers to be strategically placed where the consumer intent appears in order to catch it, and later provide a seamless experience all the way through to the purchase (and after).

Trademob Adrienne Gauldie

Adrienne Gauldie, Criteo

I think that the app economy hinges on engagement. Whether it’s about IAP or advertising, we need those eyeballs and fingertips to make any money. And the watch is inherently not about engagement.

It is inherently not as good for emails, gameplay, etc, as is a phone, but I think it probably offers developers another point to bring users back into the app through push notification and simple maintenance actions.

We may also see whole new genres arise along as we begin to understand unforeseen benefits of watch wearing. At this point, who knows exactly what that’ll be? But there’ll definitely be an impact on health and fitness, and I would guess predominantly growth in this category, so long as Apple doesn’t take too big a piece of the pie.

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