Benner on Tech: Apple Watch Hype

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

By now we all know what to expect of a big Apple product launch. The stock rallies in the run-up to the unveiling. The reporters swoon when the devices are unveiled. A modest backlash, almost as if for show, is quickly replaced by elation, and, in the case of the iPhone 6, there are record-breaking sales.

Today’s “Spring Forward” event for the new Apple Watch is so far following the script. Apple stock has rallied over the past month, and writers are talking about $10,000 timepieces that could cement Apple as the world’s leading luxury electronics maker. My Bloomberg colleague Tim Higgins has a good roundup of the four things to watch for during today’s event, which begins this morning in San Francisco and can be live-streamed here. Higgins says the most important questions to be answered are how much a watch will cost, how long the battery will last, what apps will make it special and when the company will roll them out.

The other important question, of course, is how big is this watch market? Especially for a watch that only works with an iPhone? The market for smartwatches in general is still tiny, and the death of any groundbreaking health-care features means that Apple has made a super expensive fashion accessory that essentially does what all of the other products on the market can do. It’s predicted to have payments, music, messages, maps (using Apple’s second-tier map software), and standard health and fitness tracking abilities.

I know that simply by writing this I’m playing the “modest backlash” role that’s standard with every product launch. But this is more than that ridiculous “bendgate” controversy that briefly engulfed the iPhone 6. There is a real chance that Apple breaks with its well-established product launch pattern when, in the coming weeks, enthusiasm moderates and sales level off. The watch could do only moderately well because expensive watches are, by definition, a niche product. The watch could contribute nicely to better margins at a wildly profitable company, but not be a blockbuster hit.

That’s fine for now, while the company can’t keep its existing products on the shelf. But Apple may someday be pressured by the outside world to grow even bigger -- a challenge for a company that does $200 billion in annual revenue and has a $700 billion-plus market cap. To do so, Apple would have to enter and win a huge market. That’s why analysts have long wondered about an Apple television, and why there’s been so much hype about an Apple car.

Blogger John Gruber points out that all of the predictions and scrutiny are really about having fun. Apple is finally doing something new, and we get to enjoy the advent of a shiny, beautiful object. Moments like this come around very rarely, and I’m as excited as anyone to try on and play with the brand new watch. I probably won’t buy it, though, since I’m not really the demographic. For now -- with iPhone sales zipping along -- that doesn’t matter.

Related reading:

** Jony Ive, the man behind the Apple Watch, talks to the Financial Times. Eddy Cue, the guy behind Apple Pay, talks to CNET about the watch and electronic payments. And Apple replaced AT&T on the Dow Jones Industrial Average.

Ventureland

Pinterest received 41 government requests for information, mostly from the U.S.

Snapchat met with avid tech investor Prince Alwaleed, chairman of Kingdom Holding Company. KHC confirmed the meeting (with pics, so it definitely happened), setting of a lot of speculation about a big investment in the disappearing message app.

Square doesn't want to be known as a company that makes credit-card readers, but as a full-service provider of payments and capital to small businesses, the New York Times reports.

Yik Yak is the social network that lets people anonymously post sexist, racist, harassing bile, and the New York Times says this is still upsetting to people.

The biggest, buzziest startups depend almost entirely on a huge, often on-demand workforce to survive, says the Wall Street Journal.

People and Personnel Moves

Markus Persson sold Minecraft to Microsoft for $2.5 billion. He waxes philosophical with Forbes about his life now, quoting Leonardo da Vinci: “Art is never finished, only abandoned.”

Companies

Google…

The Wall Street Journal says that the race is on to undercut YouTube.

Netflix…

The company’s chief financial officer told Morgan Stanley tech conference attendees that it got more regulation than it wanted in the FCC’s net neutrality ruling, Variety reports.

Twitter…

There’s a strong link between Twitter activity and television engagement, the New York Times reports. Islamic State supporters were responsible for at least 46,000 Twitter accounts last year, according to the Wall Street Journal.

Security Watch

The "bug bounty business" is booming, and the Verge says that startups are cashing in.

The Central Intelligence Agency is making digital spying a bigger priority, Bloomberg reports.

China says that cybersecurity legislation is a top priority, the Wall Street Journal reports.

Media Files

The fight between Viacom and Suddenlink shows just how vulnerable the traditional cable bundle has become to a landscape dominated by streaming video, reports the New York Times.

Female gamers fight against explicit harassment. The New York Times reviews the documentary “GTFO.”

Do you hate yourself for not working at BuzzFeed? This guy does.

News and Notes

Mexican drug cartels are kidnapping IT guys and could be forcing them to build a secret communications network, according to Motherboard.

These are the homeless people living in Airbnb’s shadow, the Guardian reports.

Just in time for SXSW, the Kernel has a history of the festival.

Take a trip down MySpace memory lane with the Guardian’s examination of everything that went wrong at the company.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.