Practical analysis for investment professionals
12 September 2014

The Apple Watch: Towards a New Era in Human-Computer Interaction

I was born in 1988, and by the time it became important for me to manage my own schedule (when I was about 11), I had a cell phone to tell me the time. Watches have always seemed like a matter of personal preference rather than one of incontrovertible utility. After all, why would I want some clunky wrist thing? Now I’m changing my mind.

What sold me was the unstated implication at the end of the Apple Watch’s product video. Jony Ive, the senior vice president of design at Apple, observes that “We’re now at a compelling beginning: actually designing technology to be worn, to be truly personal.”

This is a very big deal. The Apple Watch is the first device that lives on a user’s body and has the potential to deliver technological interactions without separating the wearer from their environment. Accordingly, it represents a bright line: technology is no longer something you necessarily stop interacting with the world to use. It’s just something that exists.

This post will not conduct the analysis you might expect. I will not discuss the addressable market for Apple Watches, sales estimates, or share prices. I’m more focused on what a wearable device with the potential for commercial success means for human-computer interaction than with any particular device. Accordingly, let’s consider the only question that matters.

What Is Actually Being Sold?

This thing is not just a watch. But it’s not the physical product that I am excited about. I am excited because hardware companies are recognizing that I want to use technology between screens rather than on them.

Consider a way that you might actually use the Apple Watch. The intuitive thing to focus on is querying a service or retrieving email, but that is a use case that occurs only because it’s the way we use technology now. What if it augmented our experience in another way, by giving us a new window to other people?

One of the features I have not heard enough buzz about are the Snapchat-style sketches that we will be able to share at the flick of a wrist. These sketches — like notes passed in class or cave paintings — are the essence of communication. I can share drawings (which will wind up looking fundamentally like cave paintings) with others, and we can communicate using those sketches, just like we did thousands of years ago. We have developed immeasurably complex technology which will allow us to interact with our surroundings as intuitively as we did in the Stone Age.

Much of the technology that we use in our daily lives is something that we consider separate from non-technological artifacts. As I write this on my iPhone in the subway, I am consciously using technology. I’ve made a choice to engage with my surroundings only in order not to bump into anyone in the spirit of getting work done.

But that can and will change. Apple Watches are designed to exist with us, not to be awkwardly fondled. They are a piece of technology that lives with us in reality rather than transferring us into a virtual one. A charred twig used to make a cave painting didn’t feel like technology to a caveman, and in the same way the descendant of an Apple Watch might not necessarily feel like technology to my grandchildren. After all, do you consider an analog watch to be technology?

This is one significant evolution in a trend that my colleague Jason Voss, CFA, and I classify as the rise of human technology. It’s a big trend with a lot of implications, but its ultimate implication is that tech products will come to feel more like our limbic systems than something that we consciously interact with.

This phone’s features fulfill that trend in several key ways:

  • It’s a tech product that’s differentiating itself with fashion. If you look at the watch’s product page, you may notice something interesting: the different lines of the product stress fashion features, not technical ones. Have you ever seen a laptop marketed as a fashion accessory? I haven’t even heard how fast the processor of the Apple Watch is or how much RAM it has.
  • Human health is one of its killer apps. The Apple Watch will gather the same data that a Fitbit or FuelBand does, but it will also offer other functionality. This means that one of the key ways we’ll use these devices will be to improve our well-being. In a very real sense, health will be one of its killer apps.
  • Finally, human security is assured. If you heard about Apple Pay, you might naturally wonder how they intend to keep your data secure. After all, somebody might pick up and use your watch without you present and just spend your money. Ingeniously, this watch will use contact with your skin to verify your identity. Imagine a world where such an iterated version of a system like this replaces passwords as a means of verifying your identity. In that world, technology looks a lot more human.

If Not This One, Then the Next

Whether the Apple Watch or a competing product ultimately delivers a more human interaction with technology, it seems clear that an important trend is being born: technology that doesn’t separate you from your environment.

Wearables have existed for a while (notably the Pebble Smartwatch and the large collection offered by Samsung), but the debut of the Apple Watch suggests that wearable devices will gain a large audience among both consumers and software developers inside of the next two years.

I might be being too enthusiastic, but I’m biased here. As I said, I’m excited to buy a watch. Watch geeks are excited too, so I feel like my excitement is substantiated. But what do you think? Let me know in the comments section below.

If you enjoyed this post, consider subscribing to the Enterprising Investor.


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: Apple

About the Author(s)
Sloane Ortel

Sloane Ortel serves CFA Institute's members globally as a curator and commentator. Based in New York City, she is a regular contributor to the Enterprising Investor, a co-author (with Jason Voss, CFA) of CFA Institute's Investment Idea Generation Guide, and a frequent interviewer of leading industry figures.

18 thoughts on “The Apple Watch: Towards a New Era in Human-Computer Interaction”

  1. david says:

    I much rather like wearing a old and classic Longines. I think that Apple is loosing its focus and trying to play catch back. Get short the share. Sorry my friend, you failed to convince me.

    1. David —

      Thanks for your comment in any case! I am more focused on what the watch signifies for the future of technology than the watch itself. Best of luck with your short!

      Will

  2. Ashok says:

    Too many adjectives, looks like another promo. What’s the product again?

    1. Ashok —

      Thanks for the feedback! Hope you have a great weekend.

      Will

  3. Giorgio says:

    Apple watch is a phone like device, but cant fuction probably without a phone. It would become worth buying as long as it can do anything what phone can do. Check Google Glasses, that may change your mind.

    1. Giorgio —

      Thanks for your comment! I agree that google glass is very cool, but feel that it generates some strong negative reactions from people who aren’t wearing it. The Apple watch seems promising because it doesn’t seem likely to produce the same reaction. Have you seen the article below?

      http://www.businessinsider.com/i-was-assaulted-for-wearing-google-glass-2014-4

      All best!

      Will

  4. Liju says:

    Great post. I totally agree with your view point.
    Just like the iPhone and the iPad, I expect the Apple Watch to become a big hit. It will create a new market for smart watches which will eventually be dominated by cheaper Android ones.
    We, as consumers, are going to change the way we interact with the world and organize our lives.

    1. Liju —

      You raise an interesting point about it the market eventually being dominated by cheaper android (or some other OS) devices. I agree that it’s unlikely Apple can dominate the market forever and also that consumers’ lives will be fundamentally changed by this. I would say that lives have already been changed…I have something called dysgraphia which makes it very difficult to use a pen to write. Thanks to a succession of technological innovations, I was able to get an education and now a job. It would have been very difficult to do that if I didn’t have a laptop!

      Thanks for reading and for your comment —

      Will

  5. Wikus Delport says:

    I think its a brilliant piece of innovation, next level of tech use, what can be expected from apple , can’t wait to get my hands on one

    1. Wikus —

      Good luck getting your hands on one! Thanks for reading and for your comment.

      Will

  6. Dylan Smith says:

    Agree with the thesis that that we are witnessing a transition in the interaction with technology. The trend is well on its way and the iWatch is certainly a part of it. Just not convinced that the iWatch represents that transition as strongly as the article suggests. As mentioned there are numerous pre-existing wearables that represent elements of the iWatch, what makes their existence less monumental? Apple is no stranger to trendsetting and I have no doubt that it is well aware and capable of capitalising on the wearables trend but whether this iteration of the iWatch is all that, i’m not so sure. Perhaps the mere fact that Apple has a name as a trendsetter though is enough to make the watch a self fulfilling trend setter but I’d certainly be hesitant to give the device trend setting respect because of its (in my opinion conventional) innovation.

    1. Dylan —

      You raise a very interesting point. Maybe I should have done a better job focusing in on the element which seems critical to me: that developers are likely to write software for the Apple watch, where they weren’t necessarily as likely to do so for the pebble or any of the samsung devices, which have more niche-y audiences.

      I do feel that the “soft stuff” in Apple’s presentation of the iWatch is hugely material. To hear them speaking about the device as the “most personal” they have ever created is certainly a harbinger of an approach to technology that they are taking.

      Why do you characterize this as conventional? Where do you think the demarcation between conventional and disruptive innovation is?

      Thanks for your comment!

      Will

  7. sahand says:

    I think there are two main questions to be answered:
    1- Do we need to wear technology?
    I guess yes, we do. The need to use technology has been so tightly woven in our everyday personal life and tasks that we need to have a peace of technology everywhere, all the time with us. Moreover, technology will probably begin to satisfy or even introduce new needs in new eras as soon as you begin to wear it.

    2- Are we ready to wear it?
    It all depends on the looks. This is simply one major reason why technology is approaching fashion (aside from the fact that fashion is itself a profitable market). If you need it all the time, everywhere with you, it needs to be fashionable.

    So, I think it is heralding a new era. an era that you need to have it with you as part of you and using it without consciously being aware of it. The next step might be integrating technology into our bodies. Maybe a chip in our brain. it won’t need to be fashionable then anymore. 🙂

    1. Sahand —

      You frame the discussion well! I think you’re right that technology use is such a large part of our daily lives now. What will be interesting to see is when we stop thinking of “technology” products and begin thinking just about “products”. I don’t think that many people perceive landline phones as technology products, but when my grandfather worked at Bell Labs beginning in the 1960s they were the locus of some of the most exciting innovation on the planet. Now they are so perfected that they are just phones.

      The question is: when will iWatches and iPhones become so evolved that we perceive them as just things, not technologies?

      All best, and thanks for your comment!

      Will

  8. Manik says:

    Not really into wearables as of now, but with Google and Apple (after Pebble) really making big efforts, it should be interesting to see how the masses respond.

    1. Manik —

      I totally agree. I think the important thing is that this wearable seems likely to get developer adoption, which will lead to consumer adoption. Thanks for your comment!

      Will

  9. Savio Cardozo says:

    Hello William
    I very much enjoyed your article, particularly your focus on the aspect of where this might lead to.
    Given that the watch is likely to be in contact with the skin of the wearer, there will be lots of useful applications in the medical space.
    In addition, since one can now make a call using the watch, that will, I think, signal the demise of the smartphone as we know it leading to more voice interactivity and video.
    You have pointed out that Apple will reignite the smartwatch market, and one of your readers pointed out that this will also lead to watches based on other operating systems. Wholeheartedly agree. This has been a long time coming.
    Enterprise – energize!
    Savio

    1. Savio —

      Thanks for your kind comment! I agree that the medical space will be very interesting to watch for this product. I used to use a FitBit, but stopped because I found it didn’t really generate enough value beyond simply tracking my steps. As an integrated device rather than just a fitness tracker, this could be somethig that people actually wear, which in and of itself is a huge deal.

      The ramifications for health could be massive. “Personalized healthcare” is often discussed as being a big trend once we all receive medicines that are targeted directly at our genomes, but what about our activity? Courtesy of my wifi scale, my doctor receives a full time series describing my weight instead of point-in-time measurements. When we’re able to collect data at a higher resolution, I imagine we’ll be able to conduct health research in a whole new way.

      Thanks again for your note, and thanks for reading!

      Will

Leave a Reply

Your email address will not be published. Required fields are marked *



By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close