Watch will be marketed more heavily as an Apple Pay tool, second screen, and fashion accessory

Apple, Inc. (AAPL) is reportedly stuck in an existensial trying to justify the existence of its upcoming smartwatch amid a dwindling feature set.  Launching in April 2015 and priced at $349 USD the Watch features some strong selling points, but has seen one of its most coveted features -- fitness tracking -- erode amid performance woes.

I. Less Sensors, More Problems

Originally Apple had billed the device as an unparalleled health tracking device, which would woo athletes.  The device would pack exotic bleeding edge sensors such as a piezoelectric pulse wave blood pressure sensor and a skin conductivity sensor that could be used to measure "stress level."  Deploying this high end hardware would be a bold move as competitors didn't dare field such sensors for lack of money, volume, and expertise.  

But according to the new report in The Wall Street Journal, Apple's smartwatch has been forced to ditch these potentially coveted features due to poor performance and concerns about government interference.

Apple Watch
Dioide-based heartrate/pulse tracking was only the beginning of the portfolio of health sensors in the original Apple Watch design.

The conductivity sensor reportedly succumbed to long standing problems of being unable to perform well when the user was sweating or in users with a greater abundance of arm hair.  Likewise the blood pressure sensor was too finnicky to be deemed reliable.  Yet another sensor that was considered, but ultimately abandoned was a blood oxygen sensor.

Apple Watch
The Apple Watch's conductivity sensor reportedly gave inaccurate results on hairy arms.
[Image Source: Engadget]

The report states:

Apple began developing the watch about four years ago, with a focus on health and fitness. It’s not unusual for Apple to experiment with many technologies or shift focus during product development, but the watch was especially challenging, people familiar with the matter said. Internally, the project became known as a "black hole" sucking in resources, one of these people said.

Development languished because much of the health-sensor technology failed to meet Apple's standards, these people said... These features were shelved for the first version of the watch, but they may be included in future models, the people familiar with the matter said.

Apple also was concerned that it would be limited in what its apps could say, as if it used the sensors to give health or behavioral advice, it would likely be subject to regulation by the U.S. Food and Drug Administration (FDA) and other regulatory agencies.  Getting approval for medical devices is an onerous process that can often take years to complete; Apple was not eager to delay its product that long.

Apple Watch fitness

The sensors also reportedly hurt battery life of the device, according to previous reports.

II. Why Buy an Apple Watch?  There's Still Compelling Reasons

Ultimately the Apple Watch is left with a "more pedestrian pulse-rate monitoring" solution, according to the report.  The sensor used will likely be a run-of-the-mill photoplethysmography (PPG) sensor capable of tracking heartbeat and pulse.

PPG sensors have become a mainstay of smartwatches on Google Inc.'s (GOOG) Android Wear platform.  LG Electronics Inc. (KRX:066570)(KRX:066575) new LG Watch Urbane and the best-selling Moto 360 from the Lenovo Group, Ltd. (HKG:0992) have the feature.  Samsung Electronics Comp., Ltd. (KRX:005930) (KRX:005935) Gear S and Gear Fit Tizen smartwatches also pack this feature.

Apple Watch
Apple will be forced to make due with a single direct fitness-tracking sensor, along with traditional accelerometer/GPS-based motion tracking.

With the fitness tracking potential of the Apple Watch greatly diminished, Apple will probably most heavily market it on the basis of Apple Pay.  With Apple Pay users will be able to run to the store without their phone or wallet and as long as their Apple Watch is on their wrist with a setup Pay account and the retailer has wireless payment compatibility, they will be able to pay using it.  That adds some utility from both a convenience perspective (as we all forget our wallets sometimes) and for athletes who might duck into a gas station to grab a gatorade during a long training session.

Google dropped the ball somewhat on this feature.  Android Wear currently does not support Google Wallet.  While the feature is likely coming soon -- possibly by the time of the Apple Watch launch -- it's not available at present.  That leaves only third party solutions like WearBucks, a beta-release Android Smartwatch app that lets you pay for your coffee on your watch.

Google Wallet vs. Apple Pay

In other words, it looks like the Apple Watch will have plenty of ways to sell itself -- as a mobile payment device, as a fashion/style accessory, and as a "second screen" notification hub (the focal point of Android Wear's original pitch).  But it won't be quite the modern marvel that Apple -- and its customers -- had originally hoped for.

Source: WSJ

"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs

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