Friday, January 15, 2016

What is a success?

I’m not cheerleading for the Apple Watch (exactly matching this article, I find myself simultaneously: telling most people not to buy it and yet, personally, wearing the Watch every day).

However, when it comes to determining if the Watch is a success, it seems like it would be useful to think about the right frame of reference.

The wrong frames of reference:  Annual sales in comparison to the iPhone’s revenues.  Annual sales in comparison to Apple’s overall revenues.    Benchmarking against the most successful product of the past 10 years? Revenues of the most valuable company in the world?  I agree they are relevant for the purpose of figuring out if the Watch will be a “needle-moving” business for Apple but they are bizarre benchmarks for success of the Watch itself.

I don’t know what the right frame of reference for success is but suggest that they might include:

1) Familiarity/Recognition.  This is measuring the success of building mindshare and interest in a new product - how well was the product rolled out.  Here, we have a product introduced less than a year ago that is widely recognized on sight and at a distance.  Even more conspicuously, if I say: “Is that The Watch?”, a large portion of listeners will assume I mean the Apple Watch.  For a newly introduced product, that seems like a measure of success.

2)  Market Share.  Unclear what the right scope of the market is (all watches?  all watches over $200?  all watches over $200 but less than $1000?) but it seems like it would be fair to compare the Watch against well known names.  Taking the three largest Japanese watchmakers (Seiko, Casio, and Citizen), their combined annual revenues are about $3 billion.  The largest Swiss watchmaker is Swatch/Omega.  Its revenues are about $10 billion.  If Apple Watch has sold anywhere near the numbers guessed (maybe 10 million), Apple is one of the largest sellers in the world by revenue in its first year (probably $7 billion).  For a watch (not a mobile phone, not an automobile), that seems like a measure of success.

3) Creating Prospects.  Apple Watch is a very imperfect product.  Releasing it in its initial state may have been a mistake (then again, given the above, maybe not?).  But, maybe a measure of success is how well Apple has created a potential platform.  The work of figuring out size, positioning, appearance, functions, and relationship with the phone seems to be pretty on target (given the balancing required by the state of technology and battery life).  The Watch doesn’t do all the things it should and many of the things it purports to do it doesn’t do well but, if part of the job is to create a credible platform that is worth paying attention to, again, the Watch seems to be a success.