Apple’s new product introduction last week in the company’s home base of Cupertino, Calif., clarifies the company’s determination to continue doing what it does best. Apple’s talent for influencing consumer behavior is legendary.
The iPad proved the point. Tablets had been around in various incarnations before the iPad. But by studying earlier miscues and folding in distinctive software, Apple made the tablet, for a time, a starring digital device.
So it’s not always about getting to a market first as much as it is mastering the niche, something we saw as well with the iPhone launch in 2007 and its subsequent success. Now we have two new iPhones to deal with, one of them too awkwardly large to carry as a daily phone, in my view. And we also know that an Apple Watch will make its appearance in 2015. Here there’s more than one niche to master. Just how will the Apple Watch fit in?
For “smartwatches” are not exactly new, either. Samsung offers a full-featured Galaxy Gear that displays messages, handles calls and even does videos, while manufacturers like Motorola and LG have also entered the market. As with previous tablets, these smartwatches have yet to become “must-have” gadgets. But there’s reason to believe that a smartwatch in combination with a large, tightly-crafted ecosystem like Apple’s may turn the tide.
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Here’s why: Along with the iPhone models and the Apple Watch, Apple also introduced Apple Pay, which is all about simplifying how we make purchases from our phones and, eventually, our watches. The technology in play is called Near-Field Communication, or NFC. To make it work with Apple devices, the company has created arrangements with the credit card giants – American Express, MasterCard and Visa – and with major retailers nationwide.
Now NFC is not new, either. Google used it to create its own Google Wallet service several years ago, allowing a smartphone to send credit card information to a point-of-sale terminal. Hindering its acceptance were limitations on which payment card could be used. Meanwhile, the big wireless carriers – Verizon, AT&T, T-Mobile – have also explored NFC options.
Sound familiar? We’re at the sweet spot for Apple here, a place where a powerful technology is emerging that needs to be packaged and promoted in a new, attractive package. High-end design and supple software have worked before to push a product category over the top.
Infrastructure in place
Apple has the infrastructure to make NFC take off, most especially through the use of its existing iTunes accounts. You’ll have a mobile wallet that can use the credit or debit cards you already have on file with iTunes, with the ability to add additional cards as needed. Apple stores credit card information for 800 million users to maintain the iTunes store, so Apple Pay extends this capability to move beyond the credit card for other purchases.
Paying for an item by tapping your device on a payment terminal allows easy transfer of the needed information. It’s the combination of NFC technology and a robust iTunes store system that makes me think this is going to be a shot in the arm for mobile payments. Next generation point-of-sale systems that incorporate NFC are going to be ubiquitous as the technology spreads, and Apple’s hope is to make using them easy and familiar.
Spreading mobile payments through the iPhone user base can incentivize buyers who will see the same perceived convenience in an Apple Watch. The Apple Watch will have all kinds of hurdles to overcome, including the daunting problem of battery life. A set of health and fitness apps should help drive sales, but a watch that can act as a wallet is an attractive sell in itself. To me, it’s the one advantage that may come to define this interesting market niche.
Paul A. Gilster is the author of several books on technology. Reach him at email@example.com.