How Can Android Wear Succeed?

I know I’m very late to the party, but I recently noticed this post via a comment on “The Overspill” newsletter by Charles Arthur.

“Until we have an Apple Watch of our own, no one is going to take Android Wear seriously (opinion)” link

Essentially, this article calls on Google to create their own Android Wear watch instead of leaving this to their partners.

If Google is serious about Android Wear, it should be serious about building Android Wear watches – full stop. Only Google has the long-term motivation to keep the platform alive, and only Google can afford for its hardware business to be a zero-sum game in the name of building up an ecosystem. Without our own “Apple Watch” to act as a guidepost, as proof that a better smartwatch can be made, Android Wear seems doomed to continue on in stagnation and obscurity.

Of course, the problem with this argument is that it does not align with how Android nor Windows became popular. Google did not have to build its own phone for Android to gain steam. Similarly, Microsoft did not have to make its own PC to make Windows popular. In both cases, the respective companies followed a strict OEM partnership strategy. Essentially, this argument suggests a lack of understanding on why Android and Windows became popular in the first place.

  1. Both Windows and Android gained popularity on the back of the success of the Macintosh and iPhone respectively.
  2. Both Windows and Android were low-end alternatives to the Macintosh and iPhone. They did not necessarily bring something new, and in fact they started out being downright inferior. They were however cheaper.
  3. Due to the success of the Macintosh and the iPhone, customers were already aware that a GUI and a touch-based smartphone were very good ideas and that they would be useful. Apple had already educated customers to the benefits, and had primed the market. All that Google and Microsoft had to do was to make the same benefits accessible to the rest of the market.

So applying this to the state of smartwatches, we can foresee the following scenario that would take us to the success of Android Wear.

  1. Apple will continue to work hard to educate customers on the benefits of a smartwatch. Apple will explore what features resonate, and what a smartwatch would actually be useful for (something that is still quite ambiguous).
  2. Once the Apple Watch starts selling something like 20-30 million units per year, then a) customers will be fully aware of the benefits of a smartwatch and b) Google will know what to make.
  3. Then all that Google needs to do next is to collaborate with their partners to develop such a smartwatch that is half the price of an Apple Watch, and to bring the benefits to Android users. Importantly, it is OK for this smart watch to be downright inferior. Since Android users are currently >80% of the smartphone market, there is a potential for Android Wear watches to exceed Apple Watch sales someday.

My point is, Google does not need to make its own smartwatch. Doing so would not move the needle one bit. Instead, what Google needs to do is to keep their OEMs cosy until Apple Watch goes mainstream, and make sure that their team can pounce then. The risk here is that Samsung is going their own way with Tizen OS, and will not be with Google when the moment arrives. Google has to make sure that Sony, LG and others will not follow suite, and this is indeed the only meaningful thing they can do.

The funny thing is even among the huge tech giants, it is only Apple that can predictably make a new category product go mainstream. All the rest can do is follow.

How Can Tizen Differentiate From Android Wear?

Although Apple has not released the sales figures for Apple Watch and neither has any of their competitors, it is widely assumed that Apple Watch is dominating the general purpose smartwatch segment (excluding dedicated fitness trackers).

At this point, Apple’s competitors, the Android Wear camp and Samsung Tizen have two choices. They can try to incorporate the good ideas of Apple Watch into their own designs, but at the same time keep themselves distinct in appearance in UI. The other choice is to not give a damn and make themselves as similar to Apple Watch as possible, essentially copying the design.

Samsung has essentially proven with their smartphones, that the latter choice works tremendously well, and if you have the money to wage a long legal war, you can essentially escape serious punishment.

Samsung has just shown off a teaser for their new Samsung Gear S2 smartwatch based on Tizen, and to no one’s surprise, they have chosen to copy Apple.

NewImage

The great thing about Tizen is that Samsung is not held back in any way by Google, and it is completely free to copy Apple any way they wish. Google is much more likely to shy away from this approach and try to use their own Material Design, regardless of which approach results in more sales.

So here, Samsung has clearly found a way to differentiate Tizen from the Android Wear camp. Tizen will copy Apple Watch while Android Wear OEMs will use Material Design. I’m pretty sure that Samsung’s approach is going to work better.

Android Wear OEMs Are Copying Apple Watch And That Is A Sound Strategy

When you consider that Android Wear reportedly only sold 720,000 watches in 2014 and Apple Watch had a million pre-orders on the first day, it is plainly obvious that the best strategy for Android Wear is to copy Apple Wear. Unless you have a very good reason to believe in your own original strategy and your ability to implement it, it is always better to go with the flow.

Therefore the report that the Asus ZenWatch 2 is copying Apple Watch in both design and marketing material is totally expected and makes complete sense. In fact what is more disturbing is this interview with Google’s product manager of Android Wear, Jeff Chang. Chang stubbornly reiterates Google’s almost ideological emphasis on openness and flexibility, and also on the always-on display. This is fine if Moore’s law allows Google to make the smartwatches that they want in say a year’s time, and maybe Chang has knowledge of future products that can achieve his goals. If not, Google should also be copying Apple Watch.

Incidentally, I’m very sure that ASUS should be putting a bit more effort with the back case. That is not how the back cases of watches should look.

What Apps Might Work On The Apple Watch

Just a few quick thoughts on what kind of apps would work and what wouldn’t work on an Apple Watch. This should also apply to Tizen and Android Wear.

  1. The scrolling experience is very bad on the very small screen. Apps that display a lot of data and require you to quickly scroll through are not going to work. This includes any application that has a low signal vs. noise ratio. Many social networks including Twitter, and also news applications have a low signal vs. noise ratio, and I think it is unlikely that they will work.
  2. Apps that increase the signal vs. noise ratio through opt-in, location and time can be quite convenient. The information should have a certain immediacy to it. A weather app that, instead of giving you an overview of the weather, simply tells you when a rainstorm is approaching is a good example. It uses your location, the current time, and information from the cloud to increase the signal vs. noise ratio. It also demands immediate attention so the taptic engine on the wrist is the best way to get notifications for this. Public transport apps are also an obvious target.
  3. Sports news is another genre which you give opt-in information about which team you follow. Although there isn’t really an essential immediacy to it, fans like to know what has happened, as it happens.
  4. I suspect that a new, more local (like 50m radius) kind of Groupon scheme would work. The shops that you frequently visit could do some time-limited offers (like 30-mins) and you would get notifications as you walk by. The time limit creates an artificial sense of immediacy which is good for sales and makes good use of the watch.

From a sales and marketing perspective, I expect brick & mortar stores to exploit the scheme that I showed in item #4.

A good argument can be made that Google Now can offer the same things and in an even better way. That is something that needs further study.

The interesting thing is that the Internet originally freed you from time constraints. Both the WWW and email allowed you to visit e-shops and to communicate with your friends in an asynchronous way, and you were 100% free to do it at your convenience. I sense that the Apple Watch will reverse this trend. It will pull us back to synchronising with what is happening immediately around us and tempt us to act immediately. I think the implications are going to be quite big.

Apple Watch: Mostly Used As A Watch

Even if you have a phone in your pocket, it’s really convenient to have the time on your wrist. And if you do, you’ll use it all the time.

This is something that I had suspected ever since I started wearing a wristwatch again after a 7-year hiatus (ever since my first child was born and I had to carry her all the time).

Well, I thought, that might be just because I spend all my youth wearing a watch all the time. It turns out, people who say “I’ve never been a watch person” also find that it’s a good idea to be able to tell the time.

Here’s Steve Kovach from Business Insider.

But I mostly use it as a watch.

Getting notifications on my wrist is great, but I find that I mostly use the Apple Watch like I’d use a normal watch: To check the time and date. Everything else it can do is just gravy.

Of course I don’t have nearly enough data to prove that a significant proportion of people will feel the same. I do think however, that there are signs that simply being a great watch is actually one good reason for people to buy an Apple Watch.

How Popular Will Smartwatches Be?

A while ago, I tweeted why I felt the tech pundits that suggest that you don’t need a smartwatch when you’ve already got a smartphone, are totally wrong.

Naofumi Kagami 加々美直史さんはTwitterを使っています eric analytics BenBajarin One difficulty in analysis is tech community biased towards people who can pull out phones during work

view on Twitter

The point is that whereas many people who write or comment about tech have a job where it is acceptable to pull out their smartwatches quite frequently, a large proportion of the population spend their work time directly in front of customers and are therefore unable to do so.

For example, think about waiters and waitresses at a restaurant. How would you feel if they were staring at their phones and if they didn’t notice that you were trying to get their attention? Or how would you feel if you were riding on the subway and the driver, who is responsible for your safety, was peeking in his smartphone?

There are plenty of jobs where glancing at a watch is acceptable, but staring into your smartphone isn’t.

You could easily add other jobs where a smartwatch will quickly become a necessity and not just a convenience. For example, doctors working inside hospitals have to respond quickly if one of their patient’s condition suddenly deteriorates. They carry phones with them at all times, but it’s vital that they don’t miss a call. Rather then having a vibration in your pants which can sometimes be hard to notice, it’s much better to have a tap on your wrist.

Similarly, sales reps will also do much better if they quickly respond to emails or phone calls from customers, and so missing calls is not an option. For this very reason, many Japanese employees keep their phones in their shirt pocket and not in their trousers, because it’s much easier to notice a vibration on your chest. This will no longer be an issue if you are wearing a smartwatch.

Also lacking from the discussion is women who often carry their smartphones in their bags and not in their pockets. They don’t want to miss calls or important notifications either.

The list goes on and on. In fact, you get to the point where you really start to wonder why smartwatches didn’t take off earlier, before Apple announced that it was entering the market.

The way I see it, there has always been a very strong need for glanceable notification devices that could be worn, especially for professionals, despite the lack of interest from the tech community. The true mystery is why none of the non-Apple products could deliver on that need. Somewhere, there was a block. Maybe it was the inability to quickly respond to that notification without pulling out your smartphone. Maybe it was because such devices didn’t match a suit from a design standpoint.

Whatever the reason, it seems likely that the Apple Watch has overcome the block and now we will see a flood of people recognising the benefits of notifications coming to your wrist. This is why I am optimistic about Apple Watch sales, and sales of smartwatch sales in general. I would be very surprised if Android Wear did not start to sell briskly, although it may take a product iteration or two.

Quick Take on Disruptive Potential of Smartwatches

Just a few quick notes on the disruptive potential of smartwatches.

Smartwatches will not be disruptive to watches

This is very important. This tells you who will be the main players in the smartwatch market in the mid- to long-term. Smartwatches add features to traditional watches, and will often be more expensive than comparably built watches. Therefore, it makes perfect financial sense for incumbent watch makers like Seiko, Citizen, Swatch, Tag Heuer, Casio, and others to make a smartwatch. We are already witnessing this. If incumbents are motivated to fight back, the probability of an entrant being successful is greatly diminished.

Whether the incumbents (traditional watchmakers) can succeed in making a good smartwatch is another question, but given that the operating system is already freely available as Android Wear, and that the Shenzhen ecosystem should give them the electronic components that they need, it is likely that despite not having prior excellence in electronics, incumbent watch manufacturers will be able to create smartwatches that are almost as good as the ones coming out of Samsung, LG, Motorola, etc. Since brand and design are very important for selling wearables and that there is no easy way for entrants (smartphone OEMS) to acquire a strong brand image (i.e. they don’t sell strong brand images in Shenzhen), it is likely that the incumbents (traditional watchmakers) will prevail in the smartwatch space.

Smartwatches will be disruptive to smartphones

Instead of being disruptive to watches, smartwatches will be disruptive to smartphones. Smartwatches will make many of the smartphone computing tasks more convenient and easier to accomplish. Although their current functionality is rather limited, it is very likely that advances and innovations in both hardware and software will quickly expand the scope of tasks that we can accomplish with smartwatches.

For the most part, this will be a new-market disruption as opposed to a low-end disruption. In low-end disruption, you would typically target the least demanding customers. However, in the current format, smartwatches will depend on the user also having a smartphone nearby. A typical user will need both a smartphone and a smartwatch, so they will not be the least demanding customer.

Instead, smartwatches will be new-market disruptions. They will enable customers to interact with computers and the Internet in ways that were previously impossible or cumbersome.

Now in the previous section, I argued that traditional watchmakers will prevail in the smartwatch market. They will gain share of the total compute time per user. The question then is, who will lose share? Who will be disrupted by this new market disruption? My argument is that here the incumbents are smartphones and that smartphones will be disrupted by smartwatches.

Without going into detail, this is what I expect the smartwatch landscape to look like after the dust has settled;

  1. Apple will be the undisputed number 1. They will aggressively innovate on the Apple Watch, even to the extent that it cannibalises the iPhone. The Apple Watch will gradually become more and more independent of the iPhone.
  2. The current Android smartphone OEMs will initially play in the smartwatch market, but they will fail to make profits due to their lack of brand power. Eventually most will retreat from the smartwatch market and focus on making big and powerful smartphones. The few that remain will only get the scraps from the very low-end of the market. The exception might be Samsung. If their Tizen operating system enables them to innovate faster than Android Wear, there is the possibility that Samsung will be able to profit from smartwatches (due to the lock-in they get).
  3. Current watchmakers will be the major Android Wear players in the smartwatch space, especially in profits. The electronics will be provided by the Shenzhen ecosystem or a chipset provider (maybe Intel). Depending on how well Google can monetise from Android Wear, we might see some rapid innovation.
  4. Smartwatches in general will become more and more independent of smartphones. Ultimately, people may not carry a smartphone but instead carry a MiFi-like cellular connection device paired to their smartwatch (due to the battery requirements of connecting to a cellular network). For tasks requiring a larger screen, customers might carry a tablet-like device. The theme here is that smartphones will be at least partially replaced by smartwatches.

Final thoughts

Clayton Christensen famously misunderstood the disruptive potential of the iPhone. He saw it as a sustaining innovation to feature phones, and expected the incumbents to quickly respond and shut out the new entrant (Apple). Part of his mistake is that he failed to see how the iPhone would be a new-market disruption, making PC tasks possible on a mobile device.

We should be careful not to repeat his mistake. We need to be careful in understanding to which markets smartwatches are sustaining, and to which markets smartwatches are disruptive. If we fail to correctly assess this, we will end up with the opposite prediction.

Here I make the potentially controversial prediction that the traditional watchmakers will prevail and that smartphone OEMs like Samsung, Motorola and LG will drop out of the market. This will be the measure by which my understanding of disruption theory should be judged.

Update

Since many people will understandably have an issue with smartwatches disrupting smartphones, I think I should go into a bit more detail. Instead of going into logic, I will give my understanding of what happened when the iPhone entered the market (Christensen’s mistake) and examine the parallels with the Apple Watch.

  1. Smartphones did not disrupt the mobile phone market: Many people think that the iPhone disrupted the mobile phone market. Disruption means that new entrants successfully displaced the incumbents. While this is certainly true that one entrant, Apple, gained 8.4% market share of total mobile phones, if you look at the other players, the mobile phone market is still mostly comprised of incumbent companies that used to sell feature phones. These companies were fortunate that Google provided Android for free, so that they could easily and quickly develop their own smartphones. Some may note that Blackberry and Palm almost completely disappeared. I would argue that if you look at the total mobile phone market, they were never more than a small niche so they weren’t really incumbents at all. As for Nokia, they simply bet the company on the wrong horse. If they had chosen to use Android, there is little doubt that they would have still been a force to reckon with.
  2. Smartphones disrupted PCs: To understand this, you have to lump smartphones and PCs together to create a “personal compute market”. Ben Bajarin has done this, and the following chart shows what has happened. PCs have clearly been overrun, and importantly, neither Microsoft itself nor any of the PC OEMs (with the exception of Lenovo which is very agile at M&A) successfully made the transition to smartphones. This is what disruption looks like.
    Ben BajarinさんはTwitterを使っています Microsoft s journey of computing platform share through the years http t co taFsFr1sZp

Now if we apply this to the current smartwatch situation, we can expect the situation I described in 1) to happen to the current watchmakers, and the situation I described in 2) to happen to the current smartphone OEMs.

So for current watchmakers, they will quickly adopt the new emerging technology, and the freely available Android Wear will help them immensely. The Shenzhen ecosystem will also help on the hardware side.

On the other hand, smartphone OEMs will dabble in smartwatches in the same way that DELL and others briefly entered the smartphone market (Dell Streak 5, HP iPaq). Notice the bulkiness and inelegance of their offerings, which reminds me of the bulky and unfashionable Android Wear devices that we are currently seeing from Smartphone OEMs.

In a few years time though, I predict that smartphone OEMs will mostly exit from smartwatches, just like DELL and HP did. There seems to be something that holds back incumbents in the higher spectrum of the market from creating something that is simpler and more elegant.