The Apple Watch's New OS Is Basically Apple Tearing the Watch Down and Starting Over

This is the first major Apple hardware product in more than a decade to change direction just one year after launch.

Editor's note: This is the third article in the Apple's Search for the Future series.

"We built the first computer because we wanted it ourselves." Since the 1980s, this line from Steve Jobs has been used again and again to explain how Apple develops new products.

No focus groups to collect user opinions, no competitive analysis — Apple builds an entirely new product to its own internal vision, then gets users to accept it. That is how Apple has launched every one of its hardware products, from the Mac and the iPod to the iPhone and the iPad, and the results have generally been good.

Over the past two weeks, though, anyone wearing an Apple Watch running the watchOS 3 beta every day would notice that Apple is admitting it got the watch wrong.

The Apple Watch has four software interfaces you interact with:

• Watch face — appears automatically when you raise your wrist, showing the time and other information.
• App Home Screen — appears when you press the Digital Crown, showing every app on the watch.
• Friends — appears when you press the square side button, and lets you send heartbeats and sketches to friends, who must also own an Apple Watch.
• Glance — swipe up from the bottom of the screen to pull it out, showing your frequently used apps.

In watchOS 3, Apple has replaced the last two of these outright.

The Apple Watch Is No Longer an "Intimate and Immediate Communication Device"

First, the button on the side of the Apple Watch no longer points to Friends.

In its place is the "Dock" — a set of frequently used apps. You choose which apps go there, up to ten.

At the first launch event, in 2014, Tim Cook called the Apple Watch three things:

• A precise timepiece;
• An intimate and immediate communication device;
• A comprehensive health and fitness companion.

One of the signature features worked like this: press the button on the side of the Apple Watch and Friends opened, letting you send a heartbeat or a sketch to a friend who also owned an Apple Watch.

For roughly a year before and after the Apple Watch went on sale, Apple's marketing machine repeated these three points without pause — in executives' summaries at launch events, in every press release around the launch, and at the small events Apple held in its retail stores.

As late as last September's watchOS 2 event, Apple was still showing off upgrades to Friends.

After Apple published its first-quarter financial results this year, analysts put Apple Watch sales for its first 12 months on the market at around 10 million units — roughly 1/60th of the iPhone's user base. Friends was a social tool that confined your conversations to that 1/60th.

In watchOS 3, Friends no longer takes up one of the Apple Watch's only two buttons. At WWDC two weeks ago, the executives on stage did not mention it once.

How Watch Apps Should Work Has Turned 180 Degrees Too

If the disappearance of Friends is only a change in features, then the Dock that replaced it is Apple rebuilding app development for the Apple Watch.

The Dock is a bit like the old Glance you pulled out by swiping up from the bottom of the screen, showing up to ten frequently used watch apps. The difference is that apps in the Dock open instantly, whereas before even the quickest ones took four or five seconds.

That is because when the Apple Watch first went on sale, Apple used a complicated arrangement: watch apps were actually installed on the iPhone, and what you saw on the Apple Watch was only a shell — every piece of data an app used while running had to travel from the phone to the watch over Bluetooth.

Bluetooth has never been a byword for speed or stability. Apps on the first-generation Apple Watch were unbearably slow, and few opened within five seconds. Uber, which needs GPS, often kept you waiting more than ten seconds. And once an app was open, it still didn't run fast.

Because the wait was so long, most users — myself included — barely used watch apps at all. Even if you forgot to charge it overnight, a 42mm Apple Watch could more or less last until noon the next day. But for something you have to take off your wrist to charge, charging every day and a half is no different from charging every day.

So Apple decided to spend the surplus power on apps. watchOS 2, released in September 2015, let apps run on the watch itself, and they opened somewhat faster. But the watch's hardware was limited, so every launch still meant a four- or five-second wait. Nobody wants to hold up a wrist that long.

watchOS 3 goes further, keeping up to ten frequently used apps resident in memory. In use, they open the moment you tap them. In our testing, if you fill all ten slots, the Apple Watch may be out of power by the time you get home in the evening.

This is an early beta, and the shipping version is usually much better, but you will have to charge the watch every night.

Bit by Bit, the Apple Watch Has Also Left the Fashion World

Beyond software features, you can see that the market the Apple Watch aims at has changed too.

At the start, the Apple Watch was plainly aimed at the fashion market: sponsoring fashion weeks, shooting spreads for fashion magazines before the watch was even on sale.

At its launch event, Apple invited a large number of fashion journalists for the first time, and even put supermodel Christy Turlington on stage with Tim Cook — a place previously reserved for senior executives from Apple's partners.

Even Apple's stores, known for being convenient and unintimidating, prepared an elaborate hands-on ritual for the Apple Watch, with one-on-one appointments for the expensive gold model, much the way luxury goods are sold.

It isn't hard to guess why Apple cared so much about the fashion business. The entire Swiss watch industry exported 20.2 billion Swiss francs' worth of watches in 2015 (about US$20.6 billion) — a big enough market — and mid- to high-end watches (above US$500) made up only 18% of unit sales but 86% of revenue.

Charging into a market and taking the minority of customers willing to pay a high price has always been Apple's product strategy. The iPhone, for instance, holds less than 20% of global smartphone unit sales, yet Apple takes more than 90% of the whole market's profit.

A year after launch, the Apple Watch had indeed taken a good deal of business from Swiss watchmakers, but the clearest damage was to watches priced between US$200 and US$500 — the range the cheapest Sport model (US$349–399) sits in.

The pricier stainless steel Apple Watch (US$549–1,099) and the most expensive gold Edition (US$10,000–17,000) did not hit Swiss watches at the same prices nearly as hard.

That matches the survey numbers: most Apple Watches sold so far have been the cheapest Sport model.

Apple has now given up on "fashion" and "luxury." The watch photos on Apple's website are now two Sport models and one stainless steel model. You can still buy the gold watch, but it no longer appears in the main product shots.

The stores tell the same story. Walk into a newly designed Apple retail store and the most prominent band display holds only Sport bands.

The clearest turn came at May's Met Gala. Apple announced last October that it would sponsor this showcase event of the fashion industry, and set its theme: Manus x Machina: Fashion in an Age of Technology.

When the Met Gala arrived, Apple's design chief Jony Ive did show up, as planned. But look through the hundreds of red-carpet photos Vogue picked out and you won't find a single Apple Watch.

The red carpet is the main place fashion brands sponsor celebrities, and stars will obligingly tell reporters the brand of everything they have on, from clothes to shoes to watches and bracelets. Yet even Taylor Swift, who had just shot a series of Apple ads, did not wear an Edition that night.

That nobody wore one shows not only that the Apple Watch isn't a hit in fashion circles, but that Apple is no longer willing to spend money selling its watch there.

After the Restart, the Apple Watch Is Positioned as a Health Accessory

The opposite of that retreat from the Met Gala: when Apple's Worldwide Developers Conference (WWDC) opened in San Francisco in mid-June, Apple rented, as usual, a large batch of outdoor billboards stretching from the main intercity highways into the city. Every one of them showed the Apple Watch — not the iPhone, which brings Apple the most revenue, and not the iPad Pro, which is going through a transition of its own.

At the same time, word from Apple's component suppliers this month is that Apple has raised its order for the next-generation watch to 2 million units a month — close to twice the first generation's monthly sales.

And what Apple will sell next is health.

Open watchOS 3's official preview page and the first screen shows three things: the Dock, Breathe, and the Activity watch face. All are new features.

Scroll down and you find eight feature sections, half of them about health. From here on, besides logging your workouts, the Apple Watch will help you steady your breathing and compete with friends on exercise progress.

In daily use, you notice that the Apple Watch's watch face matters more and more. For one thing, you can save several of your most-used faces and switch between them by swiping in from the edge of the screen.

The face itself has also become a doorway into apps. Take the newest Activity face. By default it shows the time, your activity level (the three colored rings) and the weather.

The buttons at the top left and top right of the screen open the Heart Rate and Workout apps. The first shows whether your current exercise intensity is right; the second logs your effort on specific machines.

Over two weeks, apart from reading app notifications, these three watch-face functions were all I needed almost all of the time.

After the Restart, Will the Apple Watch Succeed?

After the watchOS 3 upgrade, the Apple Watch feels more like a souped-up sports watch: it knows to remind you not to sit too long, to remind you to steady your breathing, to egg you on to compete with friends over workout results — much as WeChat and Nike already do.

You can imagine that as the Apple Watch drifts away from fashion, its marketing and advertising will lean further toward sport and health.

If the earlier Apple Watch was too complicated, with too many identities kneaded into it, blunting the customer's resolve, then in future it will be simpler: an exercise accessory that makes the iPhone better to use.

Having changed direction, the Apple Watch has a clearer selling point.

What remains doubtful is the apps. Apple keeps adjusting the product to improve the watch-app experience, but on a screen this small, can there really be many apps worth using? So far no watch-app developer has produced anything that makes you look twice.

Failing to enter the high-end watch market and becoming an iPhone fitness accessory instead means the Apple Watch will not be a particularly valuable business any time soon. Smartwatches still cannot fill the hole left by iPhone revenue shrinking by US$7.4 billion in a single quarter.

The bigger problem may be the repositioning itself.

For a company of more than 110,000 people, turning both its software and its market strategy around within a year of a product's launch is no small thing. Microsoft (Surface) and Google (Nest) have usually needed twice as long, or longer, for comparable adjustments.

But misreading the direction of a hardware product, and building a pile of features that were cut soon after, is a first for Apple.

The iPhone and the iPad have changed a great deal over the years too, but both traveled a set course smoothly for years at a time. Neither had to start over from the beginning, the way the Apple Watch has, right after setting out.

Four years ago, a former executive at Microsoft's Interactive Entertainment Business (which at one point had a smartphone project of its own) was asked in an interview why Microsoft could never catch Apple. His answer: "Apple hasn't made a mistake in years."