Bell Apple Watch advantage unknown: experts

Wearable use in Canada and around the world is trending up, but the numbers for smartwatches are still too low to suggest BCE Inc. can see any real gain as it prepares to be the first Canadian carrier to deliver Apple Inc.’s first cellular-enabled watch. Apple announced its latest line of products Tuesday, which included its first cellular-connected smartwatch, the Apple Watch 3. It will be LTE-enabled, must be paired with the corresponding iPhone, and will be available first from Bell, while customers of Rogers Communications Inc. will have to wait a little longer for news on the company's support for the watch. That's because Rogers said it is looking into supporting the cellular-enabled Apple Watch 3 next year. “We expect a lot of excitement around the new iPhone models and that is what we are focusing on,” Rogers spokeswoman Samantha Grant said in an email. But some users on Twitter Inc.’s social media platform voiced their concern about Rogers’ lack of immediate support for the watch, with some threatening to switch to Bell because of it. And although Bell will have a head start — with availability slated for next week and Telus Corp. to follow at a later date — experts are still wary of how much of an effect this will have on the market or whether it represents a significant boost to Bell, considering smartwatch adoption is still relatively low in Canada. “Overall wireless penetration in Canada suggests non-phone device penetration is relatively low, so fact that Rogers will not support may be an indicator that the impact will be limited,” Greg MacDonald, an analyst at Macquarie Capital Markets, said in an email. The Media Technology Monitor, a project of CBC/Radio-Canada, pegs Canadians with an Apple Watch at two per cent, according to fall 2016 data provided by spokesman Alexander Jarocki, who said the number is too small to suggest either an upward or downward trend in its adoption. Duncan Stewart, director of technology at Deloitte Touche Tohmatsu Ltd., said the number of Canadians with a smartwatch sits at about six per cent this year, according to the company's yet-to-be-published survey data from May and June, which is an increase from four per cent last year. Stewart said in a phone interview that it doesn’t seem likely that all users of the smartwatch would pay extra to have a cellular connection to their watch, considering “almost everybody I know” carries their phone everywhere they go. Stewart added not all of the Canadian smartwatch users will choose Apple’s device. The cellular-enabled watch — which will cost $5 per month for Bell customers and $10 for some United States carriers — will allow users to stay connected without having to lug their iPhone around. A Thursday report from the International Data Corp. (IDC) predicted an upward trend in wearable adoption, suggesting a device with its own wireless connection will add to consumption. “Other factors fuelling growth in the wearables market will be the inclusion of cellular connectivity along with improved sensors and algorithms,” IDC senior research analyst Jitesh Ubrani said in a Thursday press release. The release added that Apple and Alphabet Inc.’s Android will drive the market forward, but the industry will also see new entrants running their own proprietary systems, including Fitbit Inc. and Garmin Ltd. A February report by research company Canalys, which provides analysis of the mobile device industry, said the Apple Watch shipments grew 12 per cent compared to the same period last year and comprised nearly 80 per cent — more than $2.6-billion US in revenue for Apple — of total smartwatch revenue in the fourth quarter of 2016. It shipped about 11.9 million watches worldwide in 2016, with market share of about 50 per cent for the year, the report added. Jarocki said his research house doesn’t break down the number of smartwatches compared to fitness trackers, but the wearable market has grown over the past three years, with an increase to 18 per cent in the fall of 2016 compared to 15 per cent in the spring of that year and 11 per cent in the fall of 2015. Wearables are predominantly worn on the wrists because it’s “the ideal location for users to collect, view, and interact with data and applications, and the point to execute tasks like responding to notifications or communicating with other people and devices,” Ramon Llamas, a research manager for IDC, said in the release. The Thursday IDC report backed MTM’s climbing trend for wearables on a global scale, with 121.7 million devices expected to be shipped out this year, a 16.6 per cent increase from 104.4 million last year. Those numbers are expected to increase to 229.5 million in 2021, with a five-year compound annual growth rate of 17.2 per cent. Looking at the phones themselves, Rogers said it expects innovations like the new iPhone X’s augmented reality functions to drive data growth. For Stewart, while those AR functions may increase data consumption, it’s the companies’ continued improvement in screen quality that’s going to almost always be the driving force for data growth. A larger, brighter screen with more pixels and a better contrast ratio “increases the likelihood that people will watch more video, longer videos,” he said. “Any bigger, better screen is something that drives video, and video more than anything else is the thing that causes people to use data, to want higher speeds, to pay for bigger data packages and, of course, those ever lovely overage charges,” Stewart said. But the new iPhone X is expected to be one of the company’s most expensive ever, with prices starting at $1319, something that has led to questions about how carriers will sell the phone. “I suspect a higher subsidy for higher than average customers may be on offer but also consider that the cost could have a dampening effect on demand,” MacDonald said. Canaccord Genuity analyst Aravinda Galappatthige said in a Tuesday note that those high prices are likely to ensure device subsidies keep increasing. The incumbents have been able to tie the heavy subsidies to higher monthly price plans, which is driving better economics, Galappatthige said. He added “a good portion of consumers by and large” prefer this model and higher upfront subsidies. As a result of this, Galappatthige said he expects this trend to mean sustained market share for the incumbents. “We expect the incumbents would look to lock in the recipients of these higher subsidies to commensurately higher price plans, further extending the recent trend of strengthening growth.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Bell Apple Watch advantage unknown: experts

News | September 15, 2017

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Bell Apple Watch advantage unknown: experts

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