Apple hopes secret sauce can reshape markets

September 10, 2014 by Sophie Estienne
Attendees look at the new Apple Watch during a special event at the Flint Center for the Performing Arts on September 9, 2014 in Cupertino, California

It's not the first with a smartwatch or mobile payments system, but Apple is likely to use its market muscle and sense of style and innovation to redefine those categories.

With its ambitious series of product announcements, Apple has returned to its familiar formula—without creating any new product categories, it seeks to refine and perfect them to make them a must-have for consumers.

"Innovation is back at Apple after a three-year pause," said Trip Chowdhry at Global Equities Research, referring to the period since the death of co-founder Steve Jobs in 2011.

Apple's long-anticipated event on Tuesday unveiled the company's first smartwatch and two large-screen versions of the iPhone, and a mobile payment system that ties into the devices.

Chowdhry called the Apple Watch "groundbreaking," and far superior to rival devices using Google's Android Wear software, even though it has come out well after rivals like Pebble, Samsung Gear and Motorola 360.

"Right now, none of the Android Wear devices comes even close to what Apple Watch can do in terms of user interface and capabilities," Chowdhry said in a note to clients.

The analyst predicted that Apple Pay, the mobile system allowing users to tap the new iPhone or smartwatch, would be a "runaway success" because of the convenience and security built into the phones, and would also give consumers a reason to upgrade their handsets.

Jonathan Collins at ABI Research offered a similar view, saying Apple may boost the wearables segment with its smartwatch.

"Given the power and reach of the company and the strength of its brand this cannot be underestimated," Collins said in a research note.

Wearable gadgets on the market and in development, including the newly unveiled smartwatch by Apple
"Apple has a long history of making existing technologies appeal to a far wider audience and going on to make its offering synonymous with the wider market."

J.P Gownder at Forrester Research said, "Apple will legitimize and create the mass market wearables category."

Reshaping payments

Apple Pay meanwhile could be a wild card that draws more people into the company's orbit. By lining up major banks and retailers, Apple appears to have overcome many of the hurdles faced by other mobile payment systems.

Apple CEO Tim Cook speaks during a special event at the Flint Center for the Performing Arts on September 9, 2014 in Cupertino, California
"We believe Apple just reshaped the payments industry," said Benjamin Reitzes, analyst at Barclays, citing the large number of Apple partners and security features of the system.

Eden Zoller at the research firm Ovum said Apple "will prove effective at marketing mobile payments to consumers, not as a technology but as something that will make paying for goods and services with your phone fast, easy and even fun."

"When Apple introduces cool features on the iPhone people tend to use them, which is critical for the future of NFC (near field communication) as an enabling technology," Zoller added. "If consumers start using NFC for proximity payments then merchants will be more prepared to invest in it, a key factor that has held NFC back."

Integrated strategy

An attendee inspects the new Apple Watch during a special event at the Flint Center for the Performing Arts on September 9, 2014 in Cupertino, California

Kulbinder Garcha at Credit Suisse said that even if Apple Pay does not generate significant revenues, it fits nicely into the Apple strategy of integrating hardware, software and services.

"We believe that the mobile wallet will likely re-energize the iOS ecosystem and hardware sales," Garcha said in a note to clients.

"Apple's vertically integrated structure across hardware, software and services, and across multiple products results in several strategic advantages versus its peers."

The time could be ripe for a newer payment system given recent news on hacking of retailer credit card terminals, said Greg Sterling at Opus Research.

People wait in line September 9, 2014 outside the Apple Store in New York
"Apple Pay is ready to go 'out of the box,'" Sterling said in a blog post, noting that other systems such as Google Wallet have struggled.

Michael Walkley at Canaccord Genuity also welcomed the Apple Pay news.

"While consumer adoption rates in the mobile payment industry have been slow to date, we believe Apple's strategy and Apple Pay offering could help accelerate this market," he said.

Explore further: Apple may accelerate push on mobile payments

Related Stories

Apple may accelerate push on mobile payments

September 9, 2014

With its new mobile payment system, Apple is likely to use its market power to accelerate adoption of smarter retail payment technology and boost security amid growing concern over hacking.

Apple unveils ApplePay mobile wallet

September 9, 2014

Apple unveiled a new mobile wallet on Tuesday aimed at allowing consumers to use iPhones linked to credit cards for more secure, convenient payments.

Apple to unveil 'iWatch' on September 9

August 28, 2014

Apple will unveil an "iWatch" in September with the maker of the iPhone finally embarking on its much-rumored foray into wearable computing, technology news website Re/code said Wednesday.

Recommended for you

Semimetals are high conductors

March 18, 2019

Researchers in China and at UC Davis have measured high conductivity in very thin layers of niobium arsenide, a type of material called a Weyl semimetal. The material has about three times the conductivity of copper at room ...

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Sep 11, 2014
this isn't science

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.