While competitors in the smartwatch space are either holding off on releasing new models or shutting down altogether, Apple Inc. (NASDAQ:AAPL) is all-in on the struggling wearables. The company released the Apple Watch Series 2 last September.
And according to a new report out of China, signs indicate AAPL could release a new Apple Watch 3 in the fall of 2017, alongside the highly anticipated iPhone 8.
Apple Watch 3 Rumors
Nearly a year and a half separated the release of the original Apple Watch and the follow-up Apple Watch Series 2. If AAPL were to follow that pattern, we wouldn’t expect to see the Apple Watch 3 until spring 2018. In fact, there’s been speculation that Apple would stretch the window between releases even further.
Smartwatches may not have the same upgrade appeal as smartphones do (they’re seen as a more functional accessory), so product releases may end up being more widely spaced out. Tepid consumer reaction to the devices just adds more fuel to that fire.
However, MacRumors is reporting this morning that China’s Economic Daily News published a story confirming that once again Quanta Computer (OTCMKTS:QUCPF) will be manufacturing the new Apple Watch.
The trade paper goes further, though, suggesting the new Apple Watch 3 is expected to be unveiled in the third quarter of 2017.
Expected Apple Watch 3 Features
With the Apple Watch Series 2, AAPL played it pretty safe. The new smartwatch was virtually identical to the original in appearance. Key upgrades were a faster CPU, a brighter display and built-in GPS.
According to the Economic Daily News, Apple will continue to chip away against the primary consumer complaints about smartwatches. The paper says the new Apple Watch will focus mainly on improving battery life. MacRumors also points out other potential features that have been discussed as possibilities for the next version of Apple’s wearable. Top on that list are cellular connectivity (added to the GPS feature gained last fall this would make the Apple Watch 3 fully functional without requiring an iPhone on hand), and the switch to microLED display panels, which would shave some of the thickness and weight from current models.
Grim Smartwatch Market Could Heat up in 2017
2016 wasn’t exactly a stellar year for the smartwatch industry. Sales through October were down more than 50% compared to the previous year. Alphabet Inc’s (NASDAQ:GOOGL) Google division decided to delay releasing the next version of its Android Wear smartwatch operating system until 2017. And of course, the big news was the failure of smartwatch pioneer Pebble, which went out with a whimper; it was acquired by Fitbit Inc (NYSE:FIT), and all of its products were cancelled.
Lenovo Group Limited (OTCMKTS:LNVGY) also decided to hit pause on its popular Moto 360 smartwatch, with that company announcing one of the most popular smartwatches in the Android camp would not be getting an update in 2017.
If all that sounds bad for 2017, it’s not exactly great news for the smartwatch industry.
However … that new version of Android Wear could boost interest and likely will lead to a series of third-party smartwatch releases — even if the Moto 360 is absent. Google also has said it will release its own smartwatch hardware in 2017, hoping to repeat the splash it made with its Pixel Phone in 2016. And it’s always possible that Fitbit might cobble something together with its newly acquired Pebble engineers to release a true fitness smartwatch in 2017.
Given the potential for compelling new rival devices, a new Apple Watch 3 for 2017 would make sense for AAPL as a defensive strategy, helping to maintain its lead.
Apple Watch 3 + iPhone 8 = Maximum Apple
The other reason why an Apple Watch 3 in 2017 might be a smart move from AAPL’s perspective is the iPhone 8.
This year is expected to be a big one for Apple. The iPhone will be a 10th anniversary release –just in time to fight back against sliding iPhone sales. The iPhone 8 is going to be a huge release for Apple in the fall.
Having an all-new Apple watch 3 to show off beside it would be a big one-two punch, helping to preserve Apple’s smartwatch lead while enticing AAPL fans to spend even more money.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.