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Apple Watch Ultra: The most surprising thing that everyone missed !

Most of us will shrug off the Apple Watch Ultra as fancy marketing of a product with one more button, a larger screen, and a fancy loop for $800! But wait, did you realize that with just this product extension Apple will garner over $ 1 Billion+ of sales in the next 12 months or more? Yes, billion with a B in one year or less.

As an avid fan of Apple engineering, I have always marveled at their ability to extend products and disrupt new markets with a sharp clinical sense of knowing customer choices before even the customer knows they need them. So when I watched the keynote (I realized that although I might not be the target customer but what) intrigued me was the sharp targeting of the endurance athtletic community. I decided to do my research and that's when I was surprised to realize that this made all the sense in the world. So let me explain in more detail.

The Ultra is targeted at endurance athletes like Marathoners, professional Swimmers, Mountaineers, Divers, trekkers, and other extreme sports professionals. You can also potentially add cyclists, snow boarders, surfers, and many others in this category. Now let us look at the target community in some of these categories.

  1. There are more than 120 million hikers in the world with a market size spend of $12 Billion.

  2. There are over 150 million swimmers and many more aspiring swimmers

  3. Close to 2 Million marathoners and growing fast

  4. Over 8 million divers and so on

So lets just assume just this segment totals to > 500 million athletes in the world. Most of these athletes profess a certain high level of affluence and invest in tools to be good at these sports. For them a tool to excel at their passion is a must have. Hence the video of Huish outdoors at the event claiming that the Ultra becomes a "dive computer" for the diver. No one can blame them for smart marketing but hey it does everything a dive computer used to do and much more! These sports are practiced in extreme weather conditions or high risk situations. So with the satellite connectivity built on, why would anyone not invest in a life saving device?. Of course we all want to live to scale more peaks and dive in the deepest corners of the world. I guess you get my point. The target market is so perfect that I suspect many of the feature requests that have been built came from the community itself. And that is the beauty of Apple, their ability to listen to the voices of consumers as they send in their requests or feedback. Carefully dissecting market segments even if they are adjacent and may look smaller at first glance but then dig deeper to evolve something that is ground breaking at all levels.

Now lets assume that just 2% of this target market buys the ultra over the next 12 months, which is a very feasible number given the positioning of the device and the sub $1000 pricing.

We are looking at a potential $1 Billion+ product.

This is not including the sales of additional iPhones, apps, accessories and other ecosystem sales that each customer will drive. This my friends is a brilliant masterstroke of Apple. Just taking an existing product, extending it with certain features that speak to the target segment very intimately and deeply and sweeping the market.

Few other things to learn from this launch at a high level:

  1. The deep understanding of each endurance segment and to tailor the product just right to their needs is remarkable. For example increasing the size of the grooves on the crown so that you can use it even with gloves on, is customer intimacy at its best.

  2. Ensuring that you emote confidence and assurance by certifying the product to global standards sends a message of trust and comfort. The watch is certified to EN13319 and other standards across land and water.

  3. Creating bands that are easy to use and tailoring them to different environmental situations with the Trail for workouts, Alpine for intense weather and ocean band for deep sea diving.

  4. The ultra can potentially become another product category killer with a multi-billion dollar growth trajectory aka Airpods for years to come.

  5. And as the products scale up and health features keep getting integrated into it the number of extensions on this product can be numerous making it a significant volume and profitability driver for Apple for years to come.

  6. Finally to bring a compass and GPS that will help you navigate back to civilization in case you are ever lost in the wilderness. In some way is a call to take the risk yet a comfort to say we have your back. Go for it with the ultra!

For some time now I have been worried about the lack of any groundbreaking product launch from Apple. But launches like these do get my hopes up Innovation is alive and well at Apple. Maybe, maybe there is something in the works that will surprise us someday. At the least even if they don't announce a huge breakthrough product, I am happy with this ecosystem play and continual advancement of engineering across hardware, software, privacy and apps. Still, someday I hope someday we will see something big! Keeping my fingers crossed.

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