It is fitting that Apple CEO Tim Cook opened the Apple Watch presentation by showing off a Mickey Mouse watch face. The Apple Watch shares a lot more than its design sense with Disney's successful MagicBand wearables.
Apple is extending its Apple Pay wallet to the Apple Watch, but the company knows it won't succeed if it makes Apple Pay the selling point of its new wearable device. Just like Disney did with its MagicBand, Apple is making payments a feature that users can activate or ignore and just like Disney, this approach may be the key to mass adoption.
Disney's MagicBand is an evolution of its Key to the World card system, which can be used for park entry, as a hotel key, and (optionally) as a contactless payment device. This soft sell worked well for Disney; after just one full quarter, half of Disney World patrons were using the wearable. This group included walk-in guests, who wouldn't benefit from MagicBand's other functions as a multi-use park pass or a hotel key.
Cook's presentation breezed through a similar list of features. Apple Watch is a contactless payment device, but it is also a wireless hotel key and a digital boarding pass, similar to the MagicBand. It is customizable with images of Mickey Mouse and other beloved cartoon characters (similar to the MagicBand), and it boasts many other features such as activity tracking, messaging and phone calling.
The message of both products is the same: there is no single killer app. Apple Watch models range from $349 to over $1,000 based on the materials used to build it, with a special gold edition that costs upwards of $10,000. Very few people would spend this kind of money just to save a few seconds when paying for groceries; the sales pitch has to encompass much more. The mobile wallet is one of many ways this device might change the user's life, but it can't be the only way.
In its current form, Apple Pay is off to a "most amazing start and enormous momentum with more than 2,500 banks supporting Apple Pay," Cook said. In three months, Apple has tripled the number of merchants accepting Apple Pay, reaching up to 700,000 locations, he said.
A consumer wearing an Apple Watch with his iPhone nearby will be able to double tap the watch's side button to launch Apple Pay and tap the watch against a Near Field Communication reader at the point of sale to initiate payment, said Kevin Lynch, vice president of technology at Apple.
Apple Watch will be available to consumers on April 24 in several countries, including the U.S. and U.K. Cook also revealed that Coca Cola will incorporate Apple Pay into its vending machines. Coca-Cola has 40,000 vending machines in the U.S. and will increase that to 100,000 in the coming months.
"The days of crinkling dollars to get them into a vending machine are over," Cook said.
But the Apple Watch's success and by extension, Apple Pay's success depend heavily on consumers' trust in the Apple brand. The Cupertino, Calif., tech giant has overcome many PR challenges over the years, but they continue to add up, particularly for its mobile wallet.
Apple came under fire last week because some issuing banks were not thoroughly screening users as they enrolled cards with Apple Pay. The banks learned that fraudsters were downloading stolen card credentials onto Apple Pay in the iPhone.
Earlier in its life, Apple Pay came under fire for allowing certain transactions to be double-charged. And the Apple Pay announcement came just days after another Apple service, iCloud, was linked to the leak of numerous celebrities' personal nude photos.
And even if these issues don't undermine consumers' trust in Apple Pay, Apple must still face the competitive threat of the Merchant Customer Exchange's upcoming CurrentC wallet. Upon Apple Pay's launch, some CurrentC merchants blocked all NFC transactions to prevent Apple from gaining a foothold at their countertops.