Bloomberg’s Report on Apple Watch 2

Sunday, 21 August 2016

I have a few problems with Bloomberg’s report on the upcoming Apple Watch 2, credited to Mark Gurman, Alex Webb, and Scott Moritz. Starting with the headline: “Apple Hits Roadblocks in Cutting Watch Ties to iPhone”.

Apple Inc. has hit roadblocks in making major changes that would connect its Watch to cellular networks and make it less dependent on the iPhone, according to people with knowledge of the matter. The company still plans to announce new watch models this fall boasting improvements to health tracking.

The updated versions will also be able to integrate GPS-based location tracking, according to the people, who asked not to be identified because the plans aren’t public. An Apple spokeswoman declined to comment.

The use of present tense in the headline (“hits roadblocks”) instead of past tense (“hit roadblocks”), and “has hit” in the lede makes it sound like these are recent issues. If Apple ever had any hopes of putting cellular networking in the second generation Apple Watch and shipping it this year, those hopes were dashed months ago, if not last year. Hardware has long, long lead times. The lead time for new iPhone hardware is over a year long. I doubt Apple Watch is much shorter. Once the design is set, it takes many months to get the supply chain set up to produce the actual devices in volume.

The only exception I’m aware of — the one time Apple made a last-minute change to a device — was the third-gen iPod Touch in 2009. Rumored to contain a camera, it shipped without one. But as proof that last-minute changes of this sort are highly unusual, teardowns of that iPod clearly revealed a socket where the camera would have gone.

I’d bet my bottom dollar that teardowns of the new Apple Watch will not reveal places where the cellular modem and antenna would have gone.

Ever since its inception, network carriers have been urging Apple to release a version of the watch that can connect to data networks independent of the iPhone, and the Cupertino, California-based company had been working to untether it from the handset, one of the people said. As it is now the watch must be synced with an iPhone to download most types of content and consistently track location.

Since when does Apple take advice from network carriers? And of course Apple is working to add cellular networking to Apple Watch. The question at hand is only whether they had actually hoped to add to this year’s new models. I highly doubt that.

During the discussions, Apple executives expressed concern that the cellular models may not be ready for release this year and that the feature may be pushed back to a later generation, according to the people. Apple warned that, even on an aggressive schedule, the earliest possible shipment time-frame for cellular models would have been this December, one of the people said.

This makes no sense to me. If the best case scenario was shipment in December — the best case — then there would have been no question about it. Cellular would have been postponed for a subsequent generation. The holiday quarter is essential to Apple across all product lines, but it is particularly important to obvious gift items like iPods, a decade ago, and Apple Watch, today. It is highly problematic to ship a holiday quarter item as late as December. Too many people do their gift buying in November and even October. And new Apple items often hit a weeks-long backlog. A three-week backorder for an item that only shipped in December is too late for Christmas. And that’s the best case scenario. Any small glitch would mean the new Apple Watch would miss the holiday quarter entirely. That’s a disaster.

If Apple wanted to ship the second generation Apple Watch this year, it was essential that they be able to begin shipments in October, perhaps as late as the first week of November at the very latest. Anything later than that is too late. Why does Bloomberg have no timeline on when any of these decisions were made? That, to me, would settle the matter on whether this is a disappointment or was the plan all along.

The tone of Bloomberg’s report is that it’s a disappointment, even within Apple, that the new Apple Watches won’t have cellular networking. Consumers may well be disappointed, but within Apple I don’t think there was ever any serious hope that cellular networking would arrive before the third or even fourth generation models.

The whole thing feels to me like Bloomberg wanted to have a story on the new Apple Watch, but the one and only fact they had is the addition of GPS, which has been widely rumored all year. That’s it. So since they couldn’t make a story out of what the new Apple Watch is going to have, they instead spun a story about a feature it almost certainly was never going to have.