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Sep 14, 2018

Apple Watch Series 4: A Change Of Heart

Weston Henderek, Director ;

Consumer Electronics , Connected Intelligence

With the launch of the Apple Watch Series 4, Apple has further separated itself from the smartwatch pack with larger edgeless screens, better resolution, and a sleeker design. However, the biggest shift heralded in by the Series 4 is a clear pivot by Apple towards the wellness and healthcare market and away from focusing primarily on fitness.

The fitness to wellness shift
Other than notifications, the number one use case for all smartwatches is fitness tracking, according to NPD Connected Intelligence’s Consumer and Wearables survey. Apple has clearly taken advantage of that trend since the launch of the original Apple Watch by not only focusing on making its fitness capabilities easier to use than those of its competitors, but also heavily marketing the Apple Watch as a fitness-first device. However, the new Watch Series 4 marks a bit of a watershed moment for Apple, as the company has now shifted the core value proposition of the Apple Watch from fitness to wellness, as a health-monitoring device.

This shift was made possible by the inclusion of a built-in electrocardiogram (ECG) sensor, which enables seamless ECG readings directly from the wrist that can be stored and tracked over time. Additionally, improved motion sensors now enable the Apple Watch to integrate an automated SOS 911 call if the watch senses that the user has slipped or fallen and has been motionless for more than one minute.

FDA approval for ECG monitoring
While the inclusion of a built-in ECG sensor gives the Watch Series 4 a strong healthcare related differentiator, the game changer potential of this addition lies in the fact that Apple received FDA approval for its ECG tracking capabilities. This approval means that the Apple Watch is now certified as an actual medical device and that users will be able to share ECG readings with their doctor to help manage their long-term health and monitor for heart related medical conditions such as atrial fibrillation. This medical monitoring capability alone has the potential to create much wider appeal for the Apple Watch among an older demographic and could dramatically expand the number of healthcare providers that will subsidize Apple Watch purchases as part of wellness programs. While FDA approved ECG tracking will undoubtedly boost the appeal of the Apple Watch in the short term, the real payoff for Apple is in the long run when it can integrate a much wider range of medical sensors into future versions of the Apple Watch. For example, FDA approved blood pressure or needleless blood glucose monitoring would have the potential to transform care for tens of millions of people in the U.S.

The verdict
The Apple Watch Series 4 has a number of subtle enhancements, such as a larger screen (30 to 35 percent bigger with improved resolution) and a sleeker design that will give Apple loyalists a strong reason to upgrade. However, a starting price of roughly $500 for the LTE version will give pause to many potential buyers, as only seven percent of current smartwatch owners have paid that much for their devices, according to the Consumers and Wearables survey. Apple is clearly betting that device improvements will mitigate the cost increase and that the new lower cost $279 Watch Series 3 will give buyers a wider range of options at different price points. We also believe that despite the high price, the addition of built-in ECG tracking with FDA approval as a medial device will give Apple enough of an edge to see strong sales momentum of the Watch Series 4 during the Q4 2018 holiday sales cycle and into 2019. In fact, NPD predicts that Apple will sell in excess of 5 million Apple Watches in the U.S. during Q4 2018.



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