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Apple thinks that its new Watch will really take off in 2016

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June 10, 2015

In a way, Apple is really hoping that time will repeat itself with its new Watch the way the iPhone did when it first came out.

While its original iPhone turned heads when it first debuted in 2007, it didn't become a world-beating smartphone until 2008, when Apple launched its App Store and made it very simple for anyone to download apps and programs on their iPhones.

Steve Jobs' venerable iPhone went from a slick-looking smartphone that could make calls, play music and videos, and browse the Web to a device that could do virtually anything developers could imagine.

Now Apple has the same ambitions that a radical transformation will occur with its Apple Watch, which will get access to native applications that can fully take advantage of the wearable device and its numerous capabilities with the next version of its Watch OS software.

"For us, this is a huge moment," said Apple CEO Tim Cook during the company's annual developer conference on Monday. "This is how we felt when we launched the App Store in 2008."

By empowering app developers to create more robust applications, Apple is creating the foundation for making the Watch more than just a simple, traditional watch.

One of the early knocks on Apple Watch is that it hasn't been able to do anything useful enough to justify the cost-- it typically ranges between $349 and up to a staggering $17,000.

But like the App Store transformed the iPhone, the rise of native apps on the new Watch could really foster the next killer app-- something innovative and useful that will have you running out to buy the wearable device.

"Opening up native apps and access to the Watch hardware and software features to developers will make a huge difference," said Jan Dawson, an analyst at Jackdaw Research.

"Third-party apps are key to mainstream adoption of the Apple Watch and what Apple announced this week will finally make really compelling third-party apps possible," he added.

And Apple Watch's success could also have ripple effects on the broader market as well. While a a whole slew of technology companies ranging from Samsung to LG have barged into the wearables, few have really taken off.

Google's platform for wearables (Android Wear) has struggled since its very launch, with market research firm Canalys reporting vendors collectively shipped only 720,000 units last year out of a total 4.6 million wearables.

For its part, Motorola's Moto 360 is widely believed to be at the top of the Android pack, at least for now.

Several wireless industry analysts believe that Apple's smartwatch will change things around. Forrester Research also expects Apple to sell more smartwatches this year than any of its rivals have cumulatively sold, including fitness companies like Fitbit.

Meanwhile, Apple Watch could provide a lift in awareness and interest that could drive sales for the rest of the category.

Market researcher Strategy Analytics forecast in March that Apple will ship about 15.4 million Apple Watch units this year, giving the company about 54.8 percent of the global smartwatch market.

All other smartwatch makers combined will ship just 12.7 million units in 2015, according to the forecast.

Strategy Analytics believes the Apple Watch will ignite the wearables segment, saying that total worldwide smartwatch shipments will jump 511 percent, from 4.6 million in 2014 to 28.1 million this year.

In other mobile news

The U.S. Competitive Carriers Association (CCA), which represents smaller regional and rural wireless carriers, is petitioning the Copyright Office to support the legal unlocking of mobile devices.

The idea was originally planned in January but it only was finally approved in mid-April.

The issue is near and dear to the hearts of CCA's carrier members, as customers looking to leave the larger mobile carriers often need to have their devices unlocked in order to switch to another provider.

The CCA said it strongly supports an exemption that would allow U.S. consumers to unlock all of their devices that connect to a wireless network.

"Because this proceeding is forward-looking, an exemption should allow consumers the ability to unlock any relevant wireless device, and not be subservient to the will of any single mobile carrier or manufacturer," wrote Michael Lazarus, managing member of Telecommunications Law Professionals PLLC on behalf of the CCA.

"Additionally, and as directed by Congress, the exemption should not limit who may provide assistance to unlock a wireless device, and therefore should allow an agent of the consumer, whether it be another person or a wireless provider, to perform the unlocking procedure, just as a locksmith may unlock an individual’s car or home when they do not have the necessary key.”

In January of 2013, the Copyright Office had made unlocking a cell phone illegal in some circumstances. The decision was taken to help reduce large-scale phone trafficking but left a chance that consumers could still face some penalties for unlocking their devices.

The fines could range from a minimum of $2,500 to $25,000, and up to five years in federal jail.

At the time, more than 100,000 consumers signed a petition imploring President Barack Obama to make unlocking legal again. The FCC agreed to investigate the matter further, and in July of last year Congress unanimously approved a new bill that made it legal to unlock phones.

The Copyright Office is in the process of reviewing its present rules and could move to revise those rules soon.

In a statement, CCA President Steven Berry said that the decision to extend the unlocking exemption should be an easy one for the Copyright Office.

"Congress further demonstrated its support for the unlocking scenario by passing a bill that the President signed last year," Berry wrote.

"There has been near universal support for the exemption, and unlocking clearly benefits U.S. consumers and competitive wireless carriers, especially smaller carriers who still have trouble accessing the latest devices. I encourage the Copyright Office to recommend to the Librarian of Congress adoption of the unlocking exemptions proposed by CCA,” he added.

In other mobile news

AT&T announced today the completion of its Nextel Mexico acquisition, including the company’s wireless spectrum licenses, network assets, retail stores and all of its subscribers in Mexico. Valued at $1.875 billion after about $427 million of various adjustments, the transaction will merge Nextel Mexico with Iusacell, another Mexico wireless carrier that AT&T acquired for $2.5 billion earlier in 2015.

With the combined presence in Mexico, AT&T intends to create a “North American mobile service area” capable of covering more than 400 million customers in the United States and Mexico.

AT&T named Thaddeus Arroyo, CEO of AT&T Mexico, in charge of the combined company.

The North American mobile service segment has already begun to materialize partially as AT&T has added unlimited calls to Mexico to many of its consumer plans.

AT&T’s decision to move into the Mexican wireless market happens today, just as dominant incumbent carrier America Movil has been divesting its wireless assets in accordance with new federal regulations.

Part of those regulations included AT&T selling its stake in the company for $5.57 billion to Carlos Slim.

In other mobile news

T-Mobile CEO John Legere says the company is still open to a merger, and this time it is looking to some of the larger cable U.S. TV players as a possible partner. During an earnings call yesterday, Legere said that consolidation of the wireless industry was inevitable, and that we now need to get used to that reality sooner rather than later.

"It's not a matter of if but when," Legere added. "I still reiterate that in 5 years or less, we will probably think it's funny that we thought about the industry structure as the four major wireless carriers, but basically that's what it is."

On that note, Legere said that T-Mobile and the cable players were complementary to each other.

"You simply need to think about the cable industry and players like us as not competitors but potential industry partners, and alternatives for each other in the future," he added.

Legere made the comments in response to a question about whether the FCC's recent blocking of the Comcast-Time Warner merger had affected how he thinks about the industry's consolidation.

After AT&T's failed attempt to acquire T-Mobile a while back, Softbank and Sprint made an attempt for T-Mobile as well.

Sprint finally abandoned its bid as well, after wireless industry regulators came out firmly against narrowing the field to just three major carriers in the United States.

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Source: The U.S. Competitive Carriers Association.

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