It's show time for Tim Cook and the Apple (AAPL) marketing machine today, but it's also game on for the average investor looking to cash in on the inevitable popularity of the Apple Watch.
The Apple Watch's arrival in April doesn't mean that certain companies instantly win or lose. In some cases, a company like Best Buy (BBY) should win early on (though not as much as you would think ¿people are going to head to the Apple store to first learn about the watch and then buy it), while a company like Microsoft (MSFT) could be hurt over the long term, as the iOS operating system now attaches itself to our wrist.
Here are five trends where a distinct impact will be felt due to the launch of the Apple Watch.
1. Microsoft has to be concerned.
The tech giant's Microsoft Band received decent reviews from the tech geeks. It has a host of useful functions and doesn't look half bad when worn out to dinner with the wife. But, the gap in hardware innovation between Microsoft and Apple continues to widen as the former focuses on the consistent stream of revenue software brings. Compare side to side the Apple Watch and the Microsoft Band, and then read each device's specs. To put it bluntly, Microsoft risks being shut out of another market that will go on to retrain human bodily functions, social interactions, and daily workflow in the office.
Every Apple Watch that is sold will represent a deeper immersion into the Apple way of living -- from monitoring one's heartbeat and attaining new daily health achievements to controlling an Apple TV (and possibly an iCar) with an Apple Watch sport edition. The detrimental impact to Microsoft won't be seen this year, but over a longer duration. If Apple sells 30 million watches in the next two years, that will sting Microsoft on many fronts, and it should concern every widow and orphan holding Microsoft's stock for the "long-term predictable dividend" and because CEO Satya Nadella is no Steve Ballmer.
2. Can BlackBerry be any more irrelevant right now?
Sticking with the losers, how completely irrelevant is Blackberry's (BBRY) BMM messaging service on iOS, given the new messaging capabilities on the Apple Watch? I can't share my heartbeat with my hot girlfriend (disclosure: I am single) on Valentine's Day via BBM! Moreover, how could Blackberry sustain its odd popularity of late with classic phone designs, when people will want to sync their Apple Watch to an iPhone 6 plus, in order to create an efficient life on Earth? Looming bigger screens on Apple tablets destined for offices, plus the existence of the Apple Watch, should allow the company to capture further share of Blackberry's corporate stronghold over the next three years.
3. Bags at Whole Foods will be larger.
"This payment option has grown quickly to 2% of sales, which we expect will continue to increase especially after the Apple Watch launches this year," said Whole Foods (WFM) Co-CEO Walter Robb on a Feb. 11 earnings call. The Whole Foods customer is the Apple Watch wearer -- that higher income person who is obsessed with Apple and leading an efficient life. Since Whole Foods is leading on tech initiatives in the grocery store sector, by 2016 the Apple Watch is likely to be positively influencing sales due to several reasons. For example, it's reasonable to expect a greater number of highly profitable impulse buys at Whole Foods as promotions are delivered to the Apple Watch while a person is inside a Whole Foods store (with permission to do so granted upon entry to the store).
I also happen to think the combination of Apple Watch and Apple Pay, over time, will require less labor at Whole Foods. The reality is, people could pay in an aisle by scanning a product via the watch. All of this is likely to improve the guest experience even more, and drive increased visits to Whole Foods stores.
4. Under Armour owns the Apple Watch, early on.
I don't quite understand how, given its resources (people and financial) and close ties with Apple, Nike (NKE) has fallen so far behind Under Armour (UA) in the wearable software market. Under Armour is already thinking about creating a place to store your health records, which are kept out of our site in paper folders at doctor's offices. But Nike's slow-moving approach (they are rumored to be working on a new piece of wearable hardware) means that Under Armour's significant social community, made through acquisitions in the last few years, owns the Apple Watch's fitness angle at launch. I think this strong position by Under Armour will help it amass critical information to better tailor its products and marketing in a changing consumer shopping environment.
5. Department stores will win; some.
I expect Macy's (M) and Nordstrom (JWN) to be selling the Apple Watch in dedicated shops for this coming holiday season. Apple Watch will not be put in the depressing watch cases -- people need to play with these things before buying. Supplies will likely be limited, as Apple strives to drive traffic to its own retail stores, so the benefit to same-store sales for these two department stores will be muted. However, it's important that department stores begin to be viewed as destinations for wearable technology. Losers in this arms race include Fossil (FOSL) -- it will lose market share, and I am not sold on the company's push into wearables -- J.C. Penney (JCP) and Kohl's (KSS) -- either of the two is unlikely to sell the pricey Apple Watch.
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