Watch 5 to Position Apple as Undisputed Market Leader?


Sep. 13 2019, Updated 5:55 p.m. ET

Alongside the iPhone 11 series and the cheapest-yet iPad, Apple (AAPL) announced a brand-new upgrade to its Watch series, the Apple Watch 5. The company unveiled the new watch at its Tuesday event with a significant focus on digital health. Enhanced display, seamless navigation, and international emergency calls are the highlights of the Apple Watch Series 5. Innovative health apps for the new Apple Watch are also something to watch out for.

Apple Watch Series 5 GPS, with a starting price of $399, and Apple Watch Series 5 GPS + Cellular, with an initial cost of $499, will hit stores on September 20.

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Apple Watch 5 offers a range of unique features

A striking feature on the Apple Watch 5 is Always-On Retina Display. Now you can see the time and other relevant information onscreen at all times. There’s no need to raise or tap the display. A blend of technologies has made this feature possible. A low-temperature polysilicone and oxide display (or LTPO), an ultra-low-power display driver, an efficient power management integrated circuit, and a new ambient light sensor are some of these tech upgrades.

The Apple Watch 5 is packed with advanced navigation tools that allow you to see which way you’re facing. You can also see additional details like latitude, longitude, incline, and elevation on the latest Apple Watch.

One of the most essential utilities for wearable devices is enhanced personal safety. Apple went a step further with this priority and introduced its International Emergency calling facility. Irrespective of which country you purchase the device from or activate cell service in, the Apple Watch Series 5 allows international calls to emergency services. The smartwatch makes an automatic call if it senses that a user has had a fall or is motionless for a minute or so.

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Apple has introduced a range of health apps to the Apple Watch 5. These features come with watchOS 6, which includes a menstrual and fertility Cycle Tracking app. Then there’s the Noise app to save you from any hearing damage by alerting you to the ambient sound level at a music or sporting event. You can also track the pattern of your physical activity over the long run through Activity Trends on the iPhone.

Wearable devices’ contribution to Apple’s revenue

In the third quarter of fiscal 2019, Apple’s Wearables, Home, and Accessories segment reported record revenue of $5.5 billion—versus $3.7 billion in the same period last year. The company’s also very optimistic about this category, and it sees great potential here. Apple CEO Tim Cook said that wearables had an “absolute blowout” quarter with growth well over 50%. Experts consider the wearable device segment as Apple’s growth engine.

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Apple is a market leader in the wearable devices market

The Apple Watch Series 5 offers some pretty slick features, and you may want to own it right away. There’s virtually a lack of competition for Apple in the smartwatch segment. Strategy Analytics, in a report, stated that Apple Watch was a market leader in the global smartwatch segment with a 51% share, followed by Samsung, Fitbit, and Garmin.

A report from Canalys indicates that in the second quarter of 2019, Apple wearables captured 39.5% of the market share while Fitbit came in at close second with 28.3%.

Jason Low, senior analyst at Canalys, outlined two factors responsible for robust performance in the wearable market: cellular connectivity and actionable health insights. He added that, with its cellular-connected devices and increased healthcare focus, Apple’s a winner in this regard.

International Data Corporation or IDC’s Wearable device tracker for 2019–2023 shows that “earwear” such Apple’s AirPods may account for 27.4% of the market in 2019, which will likely expand to 31.0% in 2023. Meanwhile, smartwatches would account for 45.6%. This forecast implies that 70.3% of products in the wearable market are part of Apple’s portfolio. Notably, IDC expects Apple to dominate the smartwatch segment until 2021.

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Apple to keep innovating beyond Watch 5 to stay on top of the game

It’s important for investors to note that Samsung’s wearables market share increased significantly to 10.6% in the second quarter of 2019 from 6.7% in the same quarter last year. Vincent Thielke of Canalys stated that Samsung has improved its game and is focusing on right price point as well as fitness-oriented features. The price of the Galaxy Watch Active series is at $200–$300. Samsung’s latest Watch Active 2 series also offers a pretty appealing design.

Echoing this sentiment, Steven Waltzer at Strategy Analytics stated that Samsung has an impressive pipeline of models for 2019 and should perform well this year. Neil Mawston at Strategy Analytics expressed optimism in Fitbit after the company’s market share tripled to 13 % in the fourth quarter of 2018.

Currently, Apple is the market leader in the global wearable device market. However, I feel that the company has to keep offering innovative features to continue its leading position. Samsung and Fitbit may be lagging in market share now, but they’re catching up fast. Samsung’s Galaxy Watch and Fitbit’s Versa have a unique appeal for buyers. So Apple has to keep focusing on the health ecosystem to deliver value to users through its wearable segment. Speculation is also suggesting that by 2020, the Apple Watch will have a sleep tracking app.

Analysts pin hopes on Apple’s upcoming AR smart glasses

While Apple dominates the smartwatch and earwear segment, there’s one promising area where the company has yet to foray. I’m talking about the smart glasses segment. Ming-Chi Kuo of TF International Securities stated that Apple might start mass production of its augmented reality or AR smart glasses within the next three quarters. The functionality, however, will rely heavily on the iPhone. Interestingly, the Apple Watch 5 also depends on the iPhone for complete functionality.

I think Apple’s entry into the smart glasses market will do wonders for the company’s revenue. Plus, if the Apple Watch functions without an iPhone, it will attract a broader customer base.

Watch 5 excitement aside, the positive momentum surrounding Apple stock seems to have fizzled out. As of 3:17 PM ET, today, the stock was trading around 2% lower, at $218.69.


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