Pando

Yes, Watch is elegant, Pay is convenient, and Apple is back. But are we better off?

By Kevin Kelleher , written on September 9, 2014

From The News Desk

Nobody needs an Apple Watch, the way they do a smartphone. The Apple Watch is awfully bulky. The Apple Watch, as designed, appeals to the wealthy, not the global market.

These are among the initial, quick-take reactions that reminded me of the chorus of “it's just a big iPhone,” which greeted the iPad's unveiling nearly five years ago. Since then, more than 200 million iPads have sold. Skeptics also scoffed at the iPod, which the Watch resembles not only by employing a scroll wheel/digital crown for navigation, but also by serving as Apple's entry into a new product category. With Watch, as with the iPod and the iPad, Apple isn't content to enter a nascent market. It fully intends to redefine it.

Investors, of course, are pleased Apple is finally delivering on Tim Cook's promise to enter new product categories. Apple's stock closed down after the keynote, but it was likely due to investors selling the news following weeks of rumors. Apple has risen 37 percent over the past year as the sentiment that the company was washed up gave way to a narrative that it's still in the game. If Apple isn't the same company it was under Steve Jobs, it's close enough for investors.

And in fairness to Cook, his insistence over the past couple of years that we should take the long view - to wait and see what Apple was developing – doesn't seem crazy at all. The Apple Watch may not come close to the iPad's sales in its first year, but I'm not sure it's meant to. The Watch may not be Apple's attempt to create a must-have smartwatch as much as it is a first step toward creating a wearable computer that will be standard issue several years from now.

Viewed from that angle, my own initial take is that Apple has a good chance of success. If you were like me, you watched the Jony Ive-voiced video and thought, I don't need one of these, before thinking, but I do want want one of these. Only a few minutes later, I wondered if I should wait until a later generation, or at least until outside developers come up with new apps.

Watching Kevin Lynch scrawl a kindergarden fish on his Watch and expecting his colleague to to clairvoyantly understand it meant “sushi,” I realized that the true potential of the Watch, and of wearables at large, is yet to emerge. The native Watch apps, as presented, felt less like Apple declaring this is how wearables will work than it pointing into a void and telling developers, Look, go there!

Until the Watch reaches its potential, Apple is leaning heavily on fashion appeal to sell it. By definition, there is no such thing as fashion that is universal, so Apple has created three Watch designs and several more wristbands. And that points to a certain irony at play here: In pushing to obviate the wristwatch, Apple is relying on a time-honored means of selling expensive wristwatches: design an elegant case to hold all the machinery inside.

This is nothing new for Apple, which has always been an A student when it comes to hardware and a B student (or worse) in software applications. The taptic engine and skin sensors on the back of the Watch are intriguing innovations awaiting a killer app. It doesn't seem like the Activity and Workout apps are candidates. They feel more like pretty also-rans in the increasingly saturated market for health-related apps.

For all of Apple's long-term promise in wearables, it may well be that the near-term impact will come from Apple Pay, which as Michael Carney noted could shake up the online-payments sector. Apple launched Pay with partnerships lined up with Visa, MasterCard, American Express, top issuing banks, and major retailers. More importantly, it has credit card numbers from 800 million iTunes accounts, an installed base that Apple has cultivated for the past decade while it planned its move into online payments.

The catch here, again, is tied to a software issue – iCloud – that has caused Apple no shortage of corporate migraines of late. After the celebrity photos were leaked, Apple said it found no instances of a breach in iCloud accounts, but others disagreed. And still others pointed out that it didn't matter: iCloud, already disliked by so many, was guilty by association. A week later, Apple announces Pay. And who feels good about sharing financial data when selfies are so easily purloined?

Apple didn't balk, responding on two fronts. The first was by designing Pay so that it didn't share credit card numbers but instead a tokened Device Account Number that was encrypted and stored on a dedicated chip (hardware to the rescue again) after using the TouchID biometric sensor (and again). The second was to not mention iCloud at all (three months ago, iCloud was extolled as a key part of iOS 8). In fact, iOS 8 was given short shrift in the keynote.

In a way, though, today's keynote was Apple's clearest response to the way the celebrity-photo leak affected iCloud and Apple in general. Yes, Apple has a long way to go gain consumer trust in its devices and apps that store personal data. And so does Facebook, and so does Google. Yes, Apple is rolling out products and services that involve ever more intimate data – health status for Watch, financial accounts for Pay – and, yes, Apple says it's doing all it can to preserve the security of that data.

Yet we all live in an online world where we know privacy doesn't exist and where the security of our data is compromised on an almost weekly basis. Even if Apple – and Google and Facebook – are doing all they can to protect us, we still pass through each month feeling that much more vulnerable, that much closer to an inevitable violation.

Apple's response today was the same message it's delivered in its keynotes for years: the shiny design, the fashionable edge, the sparkle of the toys of the future. It may have worked. I want one of those Watches. I am considering Pay. I am going to hold off to see if any of it blows up first.

And that right there – that's the crossroads we consumers stand at right now. Up one road we opt out of new, alluring devices and services to better protect our data. Down the other, we opt in to the risk that sharing ever more intimate data online brings. It's not just an Apple crossroads, it's a mobile crossroads. Up one road, I'll be better able to protect myself. But, dang, things looks so cool going down that other road.