Apple Watch wows crowd, but how will it sell?

For the first time in years, Apple’s iPhones weren’t the star of the show. Apple unveiled a smartwatch on Tuesday, a wearable device that marks the company’s first big entry into a new product category since the iPad’s debut in 2010.

The move is important because of recent questions about whether Apple still had a knack for innovating following the 2011 death of co-founder Steve Jobs.

After unveiling the company’s two larger-screen iPhones, chief executive Tim Cook proclaimed that he had “one more thing” — the way Jobs used to close his keynote addresses. The audience attending the event near Apple’s headquarters erupted with cheers.

That one more thing was the Apple Watch, which combines health and fitness monitoring with mobile computer capabilities such as maps, but which will work only in conjunction with an iPhone.

The smartwatch, a miniature computer strapped around the wrist, is the first product made under Cook’s leadership that branches Apple into a new type of product, a device in the growing field of fitness-tracking computers that can be worn on or around the body.

Apple said there would be three editions of the watch: Apple Watch, Apple Watch Sport and Apple Watch Edition. Pricing for the Apple Watch starts at $350 and requires one of the new iPhones or an iPhone 5, 5s or 5c. The watch will be available next year.

Consumer electronics companies have yet to demonstrate a compelling need for smartwatches, while bracelets have largely been niche products aimed at tracking fitness activities. Apple’s device looks to change that.

Cook says Apple had to invent an interface for the watch because simply shrinking a phone wouldn’t work.

Much of the interaction will be through the dial on the watch, which Apple calls the digital crown. You use that to zoom in and out of a map, for instance, so you’re not blocking the screen, which would have occurred if you were pinching in and out to zoom.

Apple also worked with app developers on new functions. You’ll be able to unlock room doors at Starwood hotels, for instance, or remind yourself where you parked your car with a BMW app.

The new watch will come in a variety of styles and straps, with a choice of two sizes. Watches from competing vendors have been criticized for being too big for smaller arms.

Apple’s pricing approach is in line with its past strategy of quickly moving into a new product category with a higher-priced offering in a bet people will pay up for the Apple cachet.

The cheapest Apple Watch will cost more than Samsung’s $299.99 Gear 2 smartwatch, which has a camera and music player and also responds to a user’s voice, and is far pricier than most other wearable fitness monitors.

Katy Huberty, an analyst at Morgan Stanley, said before Tuesday’s event that Apple may sell as many as 60 million of the new wearable devices in its first year on the market, adding as much as $9 billion in revenue for fiscal 2015. That was based on her estimated price of $300, though, rather than $350.

Sales on that level would far exceed the existing market for both smartwatches and activity trackers. Global sales of activity trackers reached 13.6 million last year, according to researcher Parks Associates, while smartwatch sales rose to 3.15 million in 2013 from 300,000 a year earlier, according to Zurich-based researcher Smartwatch Group.

Samsung shipped 800,000 Galaxy Gear smartwatches last year, making it the market leader.

Olathe-based Garmin also sells a variety of watches that can track heart rate, running pace and GPS coordinates. Those watches range in price from $130 to $400, according to the company’s website.

Sony Corp. offers a $199.99 smartwatch that connects with phones based on Google Inc.’s Android software through Bluetooth wireless technology, while Nike Inc. sells the Fuelband device, which measures movement, starting at $99, according to its website.

Fitbit Inc. similarly has a bracelet-like device that tracks movement and sleep for $99.95 along with a cheaper one called the Zip, which costs $59.95 and just tracks steps, distance and calories burned. Jawbone’s Up24 wristband, which tracks sleep and movement, costs $149.99, according to the San Francisco-based company’s website. The brightly colored, splash-resistant rubber bracelet connects through Bluetooth to compatible devices, including iPhones and Android devices, for managing the data through an application.

On Tuesday, when asked after the event about how many watches Apple will sell next year, Cook declined to speculate.

“We’ll see,” he said. “Right now, I’m focusing on how great it feels to get it announced.”

This story was originally published September 9, 2014 at 8:31 PM with the headline "Apple Watch wows crowd, but how will it sell?."