With only 720,000 Android Wear watches shipped1 and 1 million total Pebbles sold, some are wondering if the market for smart watches even exists. And if there isn't a market there, what is Apple doing by entering this tiny market? As usual, we just need to look at the recent past to see why Apple may be interested in this seemingly niche market.
Apple entered the cell phone market in 2007 with a modest goal of capturing 1% of the overall market. Today they hold 14.8% of the smart phone market and modern smart phones command almost all cell phone sales. They entered the tablet market when nobody was buying tablets, but they have since sold over 200 million tablets2.
Let's also look at some Google trends for the general public's interest in different smart watches:
The simple fact is that people are more interested in what Apple is doing than basically anybody else. And this is for good reason: Apple has routinely jumped into markets that were struggling to gain traction and transformed them into highly desirable, lucrative markets.
I think the Apple Watch will have a great first year. Supply will likely be constrained for months after release, and I fully expect it to have a bananas holiday season, replacing the iPad as the go-to tech gift of the year. 2015 will be ripe with Apple Watch users showing off their new watches to their family and friends. 2016 may very well see a boom in Android Wear and Pebble sales once people who don't have an iPhone decide they want in on this new craze.
Bottom line: don't count Apple out when they enter a new/struggling market. They've done this a few times before.