Why an iWatch is not Apple’s next big thing

For those of us who have followed the life of Steve Jobs, we know most of the products he brought to market were ones he wanted to use himself. They came out of his personal life experiences. The iPod came out of his love of music and his frustrations with not being able to access what he wanted and play it back at will. The iPhone came out because he thought early smartphones were not great and he designed it around what he would want in a smartphone. The iPad was his version of making a Mac as portable as possible and replicating a computing experience, tied with new forms of content and apps, in a very convenient manner.

I believe Apple’s next big thing comes out of his experience in the health care system and his immense frustration with gaining access to his own personal records, in not being able to monitor his health in real time and in studying the bureaucratic world of health care — where data is not portable and effectively sharing data between doctors and other members of his health care team was near to impossible. I believe this is at the heart of Apple’s Healthkit and will drive one of the last big things Steve Jobs personally created for Apple before his death.

Healthkit itself is a platform or set of APIs to allow Apple and 3rd parties to link sensors, wearables and other health related apps to the iPhone and, via an Apple app, aggregate and compile data in a single location for a user to see and digest. Or in essence, each device’s sensors would monitor certain health related items but all of the data from each device would be stored in each app individually. If these apps are written to the HealthKit API, that data can now be pooled and organized inside an Apple Health app on the iPhone for analysis of a person’s health data.

The operative word here is “personal” data. The first iteration of Healthkit, for obvious privacy reasons, is locked down to the iPhone itself. Data is only for the individual’s personal use in this early stage of implementation. But it is the next two phases where things get very interesting. Phase two, as I understand it, will be to migrate this data directly to iCloud where it can be accessed by the user on any device for quick analysis and feedback. More importantly, once Apple has the data, they could add value to the user experience — if the user gives permission. For example, Apple’s algorithms, at least conceptually, could be monitoring the data and, with a user’s permission, send them various kinds of alerts, such as looking at your steps data and suggesting you walk more. For example, I am a diabetic. If my blood glucose readings are in this secure cloud area, Apple could see that perhaps three days of my readings are too high and send an alert. It could be a “health pal” to provide alerts like blood glucose examples or reminders such as telling me to exercise more.

Of course, some may say this access and analysis of a person’s health data is an intrusion of privacy — and it is if the person does not give Apple permission to help them with this data. Apple’s value proposition could be so advantageous, many would be inclined to let Apple have access to the data if it keeps them healthier. Apple also has to build a tremendous level of trust for this to work as a protected cloud service.

This becomes an important stepping stone to the third phase of this health strategy. Eventually, this data is destined to be shared, directly, privately and securely, with a person’s doctor and health care provider. When Apple announced Healthkit at WWDC, they stated the Mayo Clinic is working with them in this early stage of the Healthkit program. Since then, they have also signed up Mt. Sinai, the Cleveland Clinic, Johns Hopkins and All Script, the company behind electronic health records. We also believe Kaiser is actively involved in this project too. We have heard Apple is talking with the FDA so that they are aware of the program and Apple’s intentions. While Apple will not make any health recommendations, they still may need some FDA blessings on this so talking to them makes sense.

If you look at all of these phases combined, you can see what Apple is doing is creating the building blocks that could reinvent and personalize the health care monitoring system in new way. The more I study what they are doing with Healthkit and its potential ecosystem, the more I become impressed with both the potential scope and their attention to detail. If successful, Apple could be delivering the tools for the quantified self, at least in the area of health, and deliver to users extremely important data or info that helps them monitor their health as well as motivate them to stay healthy.

I also see this as an intensive move to create a huge health ecosystem linked to their next major product hit. Before the iPod came out and revolutionized the music industry, Apple did a massive amount of work behind the scenes with the music companies so, when the iPod shipped, it had access to a lot of content and services.

I believe Apple is going to school on itself and doing something similar here with a new product. Most think Apple’s new wearable will be an iWatch but given what I just shared above, I believe it is more likely to be a health related wearable tied to this back end health data system. Yes, it can tell time, but instead of trying to be a generic smartwatch, I think Apple will narrow its focus and make their wearable entry closer to what we see in the Nike Fuelband but on steroids. I suspect it could have a lot of new monitoring sensors and connect wirelessly to the iPhone, which then serves as a mediator to the iCloud. New services would come from that and eventually be sent to health care providers. I also think this is where the majority of Apple’s sapphire screens will be used since a health wearable demands an almost indestructible display to work properly and endure all types of physical activity

I believe we will see this health wearable this year and it will be version 1.0 of Apple’s move into health. Over the next year, they will enhance Healthkit’s abilities and attract many more developers to the Healthkit platform to help them enhance the overall Apple ecosystem for health related apps and services. Then, over time, move that data to the cloud and eventually, once the legal issues are ironed out with the various health laws and codes, make this data available to health care providers.

Although my suggestion that Apple’s wearable will be a health monitor is speculation, I see it as being very plausible and likely the device Apple brings out instead of trying to do an iWatch that tries to be all things to all people. As a matter of fact, I don’t believe Apple is doing an iWatch at all. I believe they are creating a powerful and stylish health wearable designed by Jony Ive. A wearable like this makes more sense in light of the powerful Healthkit program being created. It would be tied to this wearable and add specific value for all of Apple customers. More importantly, it moves the iPhone into the center of their program and could be the major motivator for future iPhone growth over the next three to five years and keep the iPhone Apple’s major cash cow for some time to come.

In fact, a service like this is critical to Apple’s future. While they can continue to innovate in hardware, it will become increasingly difficult to differentiate at this level. But if they can create services tied to the iPhone that enhance the iPhone as Healthkit and Homekit could, it might drive people to continue to buy and eventually upgrade their iPhones and keep them in the Apple ecosystem for a long time.

As stated above, I believe Apple’s next big thing will be to shake up the health care market and make themselves one of the most powerful health influencers in their own right, while developing a mediation business that could change the way an individual’s personal health information is monitored, managed and distributed.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

32 thoughts on “Why an iWatch is not Apple’s next big thing”

  1. Thanks Tim, great post.

    One thing I believe will be present in Apple’s wearables is that telling the time and notifications/alerts will be //optional// functions.

    Apple will teach and market to the immensely empowering and cost effective advantages of “just the facts” health/fitness monitoring.

    If people want theses advantage and approach the buying decision as “Do I want notifications/time with this too?” Apple will have introduced the age of medical/fitness realtime and past_time metrics with an impact on health and fitness akin to the iPhone’s impact on communications.

  2. I agree, I think a sensor bracelet makes a lot of sense. And it can also be the foundation of personal identity, which ties well into HomeKit and any payment system Apple may be working on. I do think Apple will be able to differentiate their offering here, with privacy and security.

    I also find Apple’s partnership with IBM interesting on this front, given that IBM’s Watson is being used for medical diagnosis, and could soon be the best doctor in the world (if it isn’t already).

  3. It occurred to me a couple of months ago that Steve Jobs’ intimate and immersive experience with all the facets of the health care system in the last few years of his life problem set the man thinking about Apple’s next frontier and he probably pointed Tim in that direction.

    But the opportunities extend beyond health and med applications. Once you set up an infrastructure that is secure and robust enough for mobile health, fitness and med, it can pretty much be used for any other application you can think of.

    I truly believe Apple is at the threshold of another significant expansion of its market breadth and scope. When you look at the hires, acquisitions, and product dev in the last couple of years and set aside your preconceptions about what’s a ‘realistic’ expectation of product and revenue expansion (I’d say most people will think 20-30%, tops) it’s hard not to let yourself get blown away by the possibilities.

    The other thing driving this is Apple probably wants to reduce their dependence on blockbuster hardware product releases to maintain growth. They aren’t stupid, they’d want to have a component of steady, reliable stream of revenues to supplement their main bread and butter. Who doesn’t?

    1. Agree on almost all your points. As Apple approaches a billion card carrying users, it probably has all the breadth it needs. Depth is the new direction, and Apple has been preparing to serve its billion of us well.

      That explains, perhaps, why Apple has been paying off Wall Street. Wally won’t like depth; Wally has commitment issues.

  4. Tim, I hope you are right about the health monitor. As it is, we fall into the hands of the health system without information necessary to carry on informed conversations, much less informed decisions. Care is triaged, and must be, and older folks are already in bin 2 when we walk in the door.

    It’s worse than buying a car. And much more perilous. We need ongoing documentation about our lifestyles, as oldsters especially, if we are to sell our medical providers on getting the best possible care. We must be our own salespeople if we are to function as our own doctors. And we must.

    As I tell my kids: Stay near the fresh water and the Mayo Clinic.

  5. Should Apple/Tim Cook be concerned about charges of inequality?
    Posit: The entire point of Apple getting into the health area, for them, is to expand their market and their revenues. For us, it’s to improve our healthcare, using iPhone, HealthKit, iWatch, etc. But…Apple products are premium, and the company’s market share is notoriously small. Seems to me, this is a potential PR nightmare, e.g., why is Doctor X or Hospital Y supporting services that only a few people can afford?

    1. There are rumors that Apple has talked to several insurance companies. I could see a partnership between Apple and insurance companies in this space. Perhaps a discount on a wearable device or something like that.

      1. I liked your post but I fear that the insurance companies are actually part of the problem.

        See Zoecello’s recent tweets with her husbands issues in getting treatment for his cancer.

        1. Maybe. But one of the reasons iPhone took off (in the US at least) is it only cost $99 or $199 down, or in some cases $0 down. I could see Apple working with insurance companies to offer a discount on their health related wearable devices. For Apple it would allow them premium pricing and for insurance companies it could be used as a consumer incentive to be more active/healthy which in turn helps keep healthcare costs and insurance premiums down. On a side note, I work for UnitedHealth and would love it if we hooked up with Apple.

          1. $399 unsubsidized. Insurance companies will offer incentives to their customers based on their usage. For example, If I lose 5% body fat and keep my blood pressure low, I get a $199 refund at the end of the year. If I lose 10% body fat and lower my blood pressure and cholesterol I get a $399 refund.

    2. Is the problem Apple’s high prices, or is it the problem the high price of carrier plans for smartphones?

      The iPhone does not have to be replaced every two years; it can be used for longer, amortizing the purchase price over a longer period and reducing the monthly cost. However, the carrier service is a fixed monthly cost, and it is due every month. Or else!

  6. There was a similar idea on another blog and his conclusion was that Apple would call it iBand. Secure health data is also capable of making any online function more secure. If the data set is capable of identifying the user with a high degree of probability it will be incredibly valuable. How much less would a health insurance company need to pay in fraudulent coverage expenses for users who have this product?

    There will be pitfalls along the way, as mentioned below, but no one who has dealt with the current system doubts that it needs effective reform. Accurate secure data is a prerequisite to be able to test whether a change improves care or reduces cost.

  7. The only thing that makes me question this theory is the hires Apple has made from the luxury fashion world. I don’t think Apple would need their sales and marketing expertise if they were just working on a fitness related device ala the FuelBand. Also 9to5mac.com recently reported on additional filings with the government around a ramp up in sapphire production and there was a reference to jewelry.

    But I do think whatever Apple is working on is going to be different than what everyone else is doing. Other companies are just taking a smart watch and putting it on your wrist. I don’t see Apple doing that. I see this device as having functionality that the iPhone does not.

    1. Your assumption is that the hires from the fashion industry is related to the iWatch.

      Also based on the hiring dates, I don’t think that the device comes out now or they are working on something else further down the pipe.

    2. They have also been making a lot of hires from the medical profession over at least the past three years, don’t know why this has flown so far under the radar. In any event you need to convince people to wear something on their wrist and that’s fashion.

      Look at the men’s watch market, you can’t sell a watch without thinking about the look, after all £2 will get you a watch that will accurate to a second over any meaningful time period. As an aside I’d bet money that if you got 20 men in a room, no two watch’s would tell the same time.

    3. Should we not be thinking of a line of wearables of varied styles and functional focuses (foci?) rather than just one device to suit all uses and tastes?

    4. Do all shoes look the same?
      No. Wearables are a form of self-expression.
      If you want lots of people to wear it, they can’t all look the same.
      Apple understands that to have mass market appeal the iDbracelet has to be fashionable and enable self-expression. Apple will work with many partners to develop a rich ecosystem of designs and customization options. Think of the multi-billion dollar iPhone case market.

  8. Your observations of Steve making what he would want to use and showing that leads directly to health is excellent. I have believed for some time that the watch was red herring for competitors.

    It will not be an iWatch unless it is tied to the Apple TV (watch a “screen.”)

    I believe Apple will continue the iP naming series by calling it the iPulse and marketing it as the center (pulse) of your “connectedness”. The pulse name will fit in with all the obvious health applications but also can be thought of being core to “the pulse (beat or Beats) of your daily life.” Many very moving commercials showing that theme will immediately follow its announcement.

    1. I think the days of the large, immobile screen serving as the centerpiece of digital interaction, or even as a significant piece thereof, has come and gone. Assuming it had even fully arrived in the first place.

      Desktops have been losing ground to laptops, and even more mobile form factors, efforts to convince consumers to upgrade their plain vanilla 1080’s to 3D have been stillborn and I predict the same fate for 4K. All this points to a shift in habits away from the large immobile screen.

      Mobile is where it’s at and I don’t think the success of the most mobile of all devices depends on how firmly it is anchored to the most immobile device. AppleTV interoperation would be nice for iWatch but it’s probably not make-or-break.

  9. When people think about a “watch”, they naturally think of a wrist watch. So when Apple applied for a trademark for iWatch, well of course it was a smart wristwatch. However the word watch comes from …(lots of boring history)… the town watch which was tasked with watching out for marauders and other “bad u’ns” intent on doing harm to the community and either dealing with it or raising a “hue & cry” to alert others to the problem.

    If your guess proves correct then iWatch indeed. Not sure how this would mean Apple is doomed but I’m sure it would be fun reading the linguistic distortion of reason used.

  10. Apple has repeatedly said it will only enter arenas where it can “Make a difference” or “leave a dent in the universe”or “change the world”. An iWatch does none of those things. iHealth would have the potential to make the biggest dent in Apple’s history.

    1. I think you’re getting hung up on the title, much like iPhone seemed to fool the “competition”. It very likely would be ihealth, but not in name. Others think it needs to be an iPxxxx to somehow “fit”, but it could easily be watch or band. The name only needs to be a name, not a definition. Having a stylish, practical, push or tap to view “watch” could be quite useful and, dare I say, fun.
      It will show up the other attempts to be the useless, clueless turds they are, although the moto, apart from its obvious issues, seems a good try.

      1. Apple is proud to announce 3 new revolutionary products.

        A powerful personal health tracker.

        An incredibly secure key to unlock your iDevices and eventually your home, car, office and much more.

        A revolutionary payment platform that uses your biometric signature to eliminate fraud.

        A personal health tracker, a secure key and a revolutionary payment platform.A personal health tracker, a secure key and a revolutionary payment platform.


        1. I agree that these three (health monitoring, secure payments, and device unlock authentication) likely represent the key functions of Apple’s wearable strategy. Will they all appear in the same product? Perhaps not in the short term, but my money is that Apple is working to integrate all three of these functions into a single wearable.

          As I read elsewhere, 64 bit mobile processors facilitate better encryption. Security and encryption are key to all of these functions. Think TouchID on steroids.

          Where I disagree with your post is with the name you propose. It will not be marketed as IDBracelet. Nope. Not gonna happen.

          1. I think Fake Tim Cook was riffing on how Jobs introduced the iPhone, as three new devices, until the audience got the joke, it was all one device, yay!

            I agree on the name. I do think it’ll be a bracelet type thing packed with sensors, but iBracelet, iD, iWatch, those all feel wrong. What about an expansion of the iPod brand into iPod Wear, or just iWear? Fashionable sensors that gather data and play some part in identity, authentication, monitoring, etc. It doesn’t have to be all wrist devices.

  11. Good article and if you’re correct – it would place Apple at the heart (pun intended) of one of the largest industries and one that impacts everyones on the plane. It would be a very bold strategy.

    One element that you allude to is the “data lending” element. I believe we need to move to a world where there is more control over personal data but that data can be “leant” with the appropriate user permissions – if Apple could pull that off as well as it’s heath-care platform – that would be remarkable.

  12. The great accomplishments of Apple are really the strength of marketing to command a premium for there version of a computing device & for the customer – simplicity (in my opinion – as a windows user – their greatest achievement). It has never been innovation – to believe that is to succumb to Apples’s potent branding.

    While Apple stuffed with cash it is low on fuel (ideas for products that can really hit the way the mobile devices have: i-pod-pad-phone). For years the #1 cash generator was the iMac which is seeing declining sales. No iHealth, but a smart watch – yes. Remember, apple never invented anything. The GUI & mouse were shamelessly stolen from bell labs. MP3 players were ignored for years by apple then copied. iPhone – purely a bold but defensive copy – pda’s existed for more then 10 years and cheap ever “smarter” cell phones were taking direct aim at mobile music play. iTunes – legal copy of Napster. iPad – 2.0 of the Apple Newton & Palm Gates & Jobs felt it could one day threaten the mac / windows monopoly with cheap “mobile computing” so they put out a competing product just in the hopes of making palm fail – which it did. Fast forward to the present: iPhone 6 is going to offer a big screen only because apple is again on the defensive after failing to win big in the lawsuit against Samsung (Lesson 2.0 – lawsuits are rarely a substitute for a well run company RE: Microsoft windows lawsuit). The great accomplishments of Apple are really the strength of marketing to command a premium for there version of a computing device & for the customer – simplicity. It has never been innovation.

    Finally, Tim Cook – the guy has aged over 10 years in just the last 3. He is working himself to death running like 78 RPM record that was meant for 33 RPM. He won’t last much longer at the speed. He would have been offered a demotion already if he wasn’t the “hand picked” successor of Steve Jobs.

  13. Apple’s great Accomplishments: for the shareholders – commanding a premium for their version of a computing device & for the customer – simplicity, but not for innovation – believing that is succumbing to Apple’s potent branding.

    While Apple stuffed with cash it is low on fuel (products to copy) that can really hit the way mobile has: i-pod-pad-phone). Number one cash generator was the iMac but it is seeing declining sales.

    iHealth not really but a smart watch (with a pacemaker- yes). Apple doesn’t invent it re-brands and improves existing products. The GUI & mouse were shamelessly stolen from bell labs. MP3 players were ignored for years by apple then copied (Apple tried to push AAC and other formats *.mov / QuickTime). Shamelessly, they didn’t want to support the more “open” mp3 format . iPhone – a bold but defensive copy – PDA’s existed for more then 10 years and cheap ever “smarter” cell phones were taking direct aim at mobile music play. iTunes – legal copy of Napster. iPad – 2.0 of the Apple Newton vs Palm – dropped once Bill Gates killed “mobile computing” with a competing product (pocket PC) kill palm.

    At present iPhone 6 offer s a bigger screen because Apple failed to keep up and shut down Samsung with patent lawsuits they should have learned from the MS lawsuit – that only gets you so far even when you win.

    Finally, Tim Cook – has aged over ten years in the past three. He is working himself to death running like 78 RPM record that was meant for 33. He won’t last much longer at that speed. He would have been offered a demotion already if he wasn’t the “hand picked” successor of Steve Jobs. Safest thing to do: wait for the
    goose to fail a few times then kill it. After being kicked and punched and back-stabbed from all sides how congenial are you?

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