When the iPod was released, it created the well-known iPod Halo Effect: many iPod users (up to 20%) bought a Mac after owning an iPod. Then, as the iPhone debuted, it too had a Halo Effect on Mac & iPad sales. Mac sales and marketshare have never been higher, and a huge reason is iPhone. As large as these Halo Effects were, though, the Apple Watch will have an even greater Halo Effect by converting Android users to iPhone, increasing engagement with Apple’s brand, and helping users experience the exponential benefit of the Apple ecosystem.
Halo Effect: Android Switchers
Apple Watch is, and almost certainly always will be, an iOS-only device. Even as the iPhone 6 saw the highest rate of Android switchers in the last three years, the desirability of Apple Watch will be yet another reason for users to make the switch to Apple.1 In fact, a recent Reuter’s survey found:
roughly 13 percent of survey respondents who did not own an iPhone said that they would consider buying one in order to buy an Apple Watch, which needs an iPhone to work fully.
Surveys regarding as-yet-unreleased products are no certain proof, but even if the survey was off by a factor of three, a 4% user switch rate would be significant.2 Remember that iPhone customer retention rates is over 90%, so this 4% would be a near-permanent marketshare gain for Apple. This Halo Effect is easy enough to predict, but the more significant Halo Effect will be through greater engagement with Apple’s brand and ecosystem.
Halo Effect: Engagement with Apple
Apple Watch marketing is appearing in places Apple has not typically advertised–fashion and fitness sectors–and is reaching people Apple has typically not reached. Further, as Horace Dediu has argued, Apple’s marketing has shifted from appeals to the rational, to the emotional, and now to the endocrinal response in people. For all the criticism of Apple Watch Edition, its existence has resulted in prestigious marketing of the device. Apple’s marketing has, perhaps, never been as broad or as deep as it is for Apple Watch.
If effective, this marketing will lead to greater engagement with Apple than even iPhone advertisements have.
Effective iPhone advertising lead to purchases of iPhones, but most of these sales (80% in 2013) do not occur at Apple Stores. Effective Apple Watch advertising, on the other hand, will require users to visit an official Apple’s sales location, either online or at a retail store. In fact, given the personal nature of the device and diverse options available, the number of visits and purchases at Apple stores will be higher than in the past.
This engagement with the Apple Stores are crucial in furthering sales of Macs and iPads, one reason Apple has focused so much on increasing store visits and building more retail locations.
As individuals engage with the Apple brand through broader marketing and store visits, the Apple Watch Halo Effect will grow. The most significant Halo Effect, however, will come from users experiencing the exponential benefits of having multiple devices in Apple’s ecosystem.
Halo Effect: Apple’s Ecosystem
With the iPod Halo Effect, users essentially bought a Mac in hope that it would be as good as the iPod, but not to gain additional iPod functionality. Likewise, in the years before iCloud, the iPhone Halo Effect meant that users bought Macs to have a computer as good as iPhone, but not to gain additional functionality. Apple Watch, however, will demonstrate to users the multiplying functionality that users gain through being in the Apple ecosystem.
Most iPhone users own just one Apple device, but by definition, every Apple Watch user will own multiple Apple devices. The benefits of being in that ecosystem, with iCloud improvements, Continuity, and Handoff, have never been greater; and the more devices one has, the more the benefits multiply. Many iPhone users will discover, for the first time, the exponential benefits of having one Apple experience across multiple devices.3 Apple has highlighted Continuity on Apple Watch, saying
“Start on Apple Watch. Continue on iPhone.
Apple Watch is designed for quick interactions, but sometimes you want to say more. So we made it easy to transfer messages, calls, and email from Apple Watch to iPhone, where you can pick up right where you left off.”
PC users who experience Continuity on Apple Watch will want it on their tablets and, after having it on a tablet, will want it on their computer (or vice-versa). Further, some Apple Watch apps enable things that would not be possible with just one device–like Camera Remote for iPhone camera or Remote for AppleTV–and this, too, will demonstrate to users the gains that can be had from having multiple Apple devices.
The iPod and iPhone created Halo Effects because they demonstrated to users the additive benefit of having an Apple device, but the Apple Watch Halo effect will demonstrate the exponential functionality of having multiple devices in the Apple ecosystem. And starting at just $349, even cheaper than the iPod, the benefits of the Apple ecosystem are incredibly accessible.
By increasing the Android switch rate, engagement with Apple’s brand, and demonstrating the benefits of the Apple ecosystem, the Apple Watch will create the biggest Halo Effect yet.
Update 4/10, 9:00
Another reason for increased iPhone sales is that Apple Watch will spur upgrades as people want an Apple Watch-compatible iPhone (iPhone 5 or better). While not about ecosystem gain and thus not “halo effect” in the strictest sense, it does dramatically help Apple. In fact, it seems this dynamic is already happening.
You might want to check out Michael Simon’s piece at Macworld, who sees the Halo Effect shaping out in a slightly different way.
1. I don’t think it’s an accident that Apple may now give gift cards to Android switchers, something they’ve never done before. There will be far more interest than ever before in switching, especially as the high-end Android market suffers.
2. This survey, taken shortly after the Spring Forward event also found that nearly 50% of those surveyed had not recently heard news about Apple Watch. There is good reason to think that the switch rate will actually be higher than 4%.
3. Assuming, of course, that this is a seamless and bug-free experience. Early hands-on reviews seem to suggest this is the case, but if this experience is buggy, an anti-Halo Effect is likely to take place as users are turned off from Apple’s ecosystem. Apple needs to get this right.