Apple Watch/Apple Pay: Not The Disruptor We Were Expecting?

After folding a typically awful starting hand at my weekly poker game, I engaged in a conversation with Sam (not his real name). The topic was my new Apple Watch – which will be available for actual purchase, rather than just ordering, in Apple stores starting on June 26 – now adorning my heretofore two-score-long bare wrist. Even though an Apple fan, Sam scorned my purchase and my offered personal demo, but his curiosity soon overcame his cynical pose.

It was difficult to extol Watch’s attributes – there aren’t many other than it keeps your iPhone in your pocket. It mostly duplicates iPhone’s functions, adding health and activity tracking a la the less expensive Fitbit and its ilk, as well as provides various gentle reminders and updates. But Apple’s Force Touch adds another few degrees to an already steep set-up and learning curve and even though it can run for a couple of days, it should be recharged every night.

But Watch’s biggest annoyance is the often interminable delays for demanded data and text dictation caused by its reliance on two wireless connections: cellular and Bluetooth. Nearly every information request you make needs to be transmitted from the Watch to your iPhone to the Net, then back from the Net through your iPhone to the Watch. Any hitch in the Bluetooth or cellular connections means you don’t get what you ask for, then you end up having to dig out your iPhone anyway.

In all, Watch is not particularly functional and often more trouble than it’s worth, and Watch’s few non-iPhone additives hardly justify its more-expensive-than-iPhone pricing. Perhaps the coming of watch OS 2 this fall will fulfill more of Watch’s promise and potential to become more useful and less redundant. But at the moment, it’s mostly good-looking and a conversation starter/blog topic.

Oh, and it tells time.

But rather than denigrate my Watch (which would be denigrating myself since I’d spent quite a bit of prospective poker proceeds on it), I instead extolled its technology. For one thing, you get easier access to Siri: lift your wrist as if to check the time and, when Watch wakes, just say “Hey, Siri!” and ask your question. That’s kind of cool, assuming she understands what you’re asking and she can quickly connect to her cloud-based brain.

Another, and perhaps more important, factor for Watch’s possibly disruptive success, as I noted six months ago, may be Apple Pay. Just double tap the nearly-flush button below Watch’s crown knob and, when your Apple Pay card pops up on the Watch face, just touch Watch to the NFC point-of-sale (POS) terminal. That’s it, unless you’re using a debit card, in which case you’ll have to input your PIN code on the POS terminal. Seeing the reaction from the sales clerks and the customers behind me on line was trés entertaining.

Bottom line, I explained to Sam, not having to fish my iPhone or wallet out my pocket, finding my debit card and sliding it through the POS terminal made Watch a slightly more convenient POS payment option.

Suddenly, the player to my left, Bob (his real name), sarcastically interjected “Yeah, taking your wallet out of your pocket and sliding a card – ooh, yeah, that’s really inconvenient!”

I resisted delivering an equally sarcastic response. Instead, his attitude got me thinking of the uphill battle Apple and all mobile payment device makers face: a population consisting of Bobs, each of whom has little or no clue about this whole digital wallet concept and who has little to no use for a smartwatch, regardless of its capabilities.

Who Benefits from Digital POS Payments?

According to Deloitte’s annual “Technology, Media & Telecommunications (TMT) Predictions” report, of the world’s 600 million-plus NFC-enabled smartphones just 5 percent will be used at least once a month to pay for something in a store by the end of this year. That’s at least 30 million mobile wallet POS transactions – enough for retailers and banks to at least accommodate the few, well-heeled NFC-equipped geeks.

But 30 million or 50 million or even 100 million transactions in a year is a blink when measured against the 10-15 billion (with a “b”) consumer visits to U.S. retail establishments there will be this year.

And sales of smartwatches have barely moved beyond the vaguely interested demographic. It’s estimated that a hair more than 28 million smartwatches will be sold worldwide, more than half of them Apple Watches.

So smartwatches may be a nice business for their hawkers, but they’re hardly disruptive, which makes wrist-borne POS payment capabilities (so far) even less so.

You’d think Apple could push the popularity of POS payments whether they are made through Watch or any smartphone (including Android phones).

Google, which just formally introduced its long-simmering Android Pay system (and eliminated Google Wallet), isn’t a device maker, and the search company’s Android Wear smartwatch OS has been adopted by few smartwatch makers. Plus, Google’s biggest hardware partner, Samsung, is devising its own mobile payment scheme (which the company claims can/will co-exist with Android Pay – uh huh).

Bottom line, neither Android Wear nor the array of Samsung’s Gear smartwatches have made much of a market impact, even though it’s likely NFC payment option a la Apple Watch/Apple Pay will be added to both. LG’s elegant Watch Urbane does include a thus-far undefined mobile payment NFC option.

So why are POS mobile payments not gaining mainstream traction? Maybe because mobile payments aren’t really meant to solve a problem for consumers, merely present an opportunity for retailers and banks to expand their marketing reach.

Or, as Bob might ask, why should I pay $400-plus to help these people? My regular watch, regular wallet and iPhone are plenty convenient, especially since I still have to carry two of them anyway.

In short, is Apple Watch really a disruptive device? And is Apple Pay on Apple Watch or NFC retail payments in general a solution in search of a problem? No and yes, my friend Bob opines.