For Apple lovers, this was a big month. Not since the days of Steve Jobs and the introduction of the iPad has Apple announced something as major as the Apple Watch. As I viewed the announcement, which came after a line made famous by Jobs’, “One more thing…,” I couldn’t help but be impressed. Here’s why…
Apple unveiled two types of innovation – one was a classic sustaining innovation with the iPhone 6 and iPhone 6 Plus. Another was what I call an integrative innovation with the Apple Watch. One thing is for sure: Apple did not unveil a “disruptive” innovation yesterday. But here’s why that doesn’t matter and why Christensen’s theory of disruptive innovation fails to explain products like the Apple Watch.
Apple Watch Integrates Multiple Functions Into One Device
To start, lets list the things an advanced non-smart watch can do for people:
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- Keep and display time
- Show altitude
- Show temperature
- Show barometric pressure
- Make a fashion statement (self-expression)
And that’s pretty much it. A watch that can do those things will probably cost anywhere from $200-1000. Definitely not cheap.
Now let’s list the things the Apple Watch does for people. To clarify I’ll bucket these features into four categories:
- Standard and advanced watch features –> valued by consumers anywhere from $200-1000 (or more depending on the level of self-expression)
- (listed above)
- Convenient, always accessible display
- Show your calendar and calendar events
- Show weather
- Show photos
- Show (and feel) turn-by-turn navigation
- Show stock prices
- Convenient controller of other devices
- Initiate phone calls
- Send and receive text messages
- Send and receive email
- Send and receive voice messages
- Control music
- Control iPhone camera remotely
- Control Apple TV and iTunes
- Things it can replace
- Fitness tracker –> valued by consumers anywhere from $80-150 (see jawbone.com)
- Wallet –> valued by consumers anywhere from $20-100
All this functionality for a price that starts at $349 – a number that is well within the range of mid-level and premium watches. Even if the Apple Watch only did numbers 1 and 4 above, its value would already be worth the $349 price tag to many people.
So why is this not considered a “disruptive” innovation? According to the theory put forth by Clayton Christensen, to be disruptive a product needs to be on the low end of the performance/cost curve and have considerable room for improvement into more sophisticated market segments. In other words, disruptive innovations first appeal to cost conscious users who only want the product to do one simple thing – but do it very well – at the expense of doing a number of things. Given the list above, it doesn’t seem like that’s a very good description for the Apple Watch. It’s a good thing that Apple ignores this theory because the iPhone was technically not disruptive either. And we all know how that particular product turned out.
So if the Apple Watch is not a disruptive innovation, what type of innovation is it? In my experience I’ve found there are four types of innovation, all of which are related to each other and to the product life cycle:
- Disruptive – a low-cost product that does one “job” very well; these are at the beginning of a product life cycle
- Integrative – a high-cost product that integrates multiple jobs to be done into one; these are also at the beginning of a product life cycle
- Sustaining – a slightly improved and more polished version of a previous generation product; these start further into the product life cycle
- New market – a product that is introduced to a new geographic market or a new use-case than it was originally designed for; these also start further into the product life cycle
With these four categories we can put the Apple Watch safely into the Integrative Innovation category because it combines multiple jobs to be done into one and makes other products that previously only did one job (such as fitness trackers like Jawbone) obsolete. This is the same thing the iPhone did with several products including stand-alone GPS units and portable mp3 players.
I should note that the Apple Watch could be described as disruptive if you change the market of analysis to smartphones and say that the Apple Watch is disruptive to smartphones but even that is a stretch. By that logic the iPhone should have already replaced the need for laptops but despite the theory’s prediction, both laptops and iPhones have co-existed peacefully.
For more on the theory of integrative innovation, see my post on the iPhone.
Kudos to Apple for introducing another exciting innovation to the world. Yes smartwatches are not new (Moto 360, Samsung Galaxy Gear, etc.) but as Apple did with mp3 players, it seems like they got it right.