Apple Watch Lacks 'Killer App' and 'Aha' Moment - Analyst (AAPL)

Rosenblatt Securities analyst Brian Blair had a thoughtful piece on the Apple Watch (NASDAQ: AAPL) today after spending a number of months using the device on and off. Blair said while the company may sell 13-15 million units this year, which may constitute a "hit", consumer demand beyond Apple's most loyal fans is still unknown.

With the device not in stores currently it is hard to pinpoint what that demand will be, the analyst comments. All that is known is that the company can’t meet initial Internet demand (likely due to manufacturing issues/some issues with taptic part), although Apple is not quantifying what that means in real numbers.

From using the Watch off and on since September, attending Apple events, and spending numerous hours with it one-on-one, Blair said he knows the Watch "fairly well." In short, he said he is "skeptical" of the device and similar devices, saying he is not convinced that he needs a wearable on his wrist everyday.

Blair said the main reason for his skepticism is the lack of a 'killer app.' "There isn't a single feature that is causing the masses to say "I need that,"", the analyst comments. "When Steve Jobs introduced the iPhone in 2007, it was "an iPod, a phone and an internet communicator". It was obvious why you wanted it." Currently the Watch is just a "gee whiz" device, he said.

The analyst goes on to say he has yet to have that "aha" moment with the Watch. "I had one with the Nintendo NES, the Nintendo Wii, the Nintendo GameBoy, the original US Robotics Palm Pilot, Motorola’s StarTAC phone, the original pager-style Blackberry, the first generation iPhone and the first generation iPad – to name a few," Blair said. "I haven't yet had that moment with the Watch."

The analyst said while early users are on both sides of the fence regarding its usefulness, a few things are clear as we enter the Watch’s second month of very limited availability: 1) checking your watch constantly in a social situation isn't any less rude than checking your phone constantly, 2) it's not clear whether the utility of the watch is worth the hassle of charging it every night and 3) if there is a primary application that makes the Apple Watch a must-have product, no one knows what it is.

Blair said a caveat is that "we don’t yet know where developers are going to take this product- that’s the variable that no one (not even Apple) knows, and that’s what I have to consider in my skepticism and what I have to ponder as I consider the potential market size."

Apple creates platforms and developers and consumers decide what direction to take these platforms. He notes that Angry Birds (launched in 2009), Instragram (launched in 2010) and Candy Crush (launched in 2012) all shaped what the iPhone could be for consumers. "Right now, it's not clear what the killer app is for the Apple Watch," he said. "I’m convinced it hasn't been developed yet."

While the future of the Apple Watch might actually be health and the sensors, how successful the Apple Watch will be 5-10 years from now will depend on what applications come out in the next few years. Until then, he said, the jury is still out.

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