Big Data will shield the Apple Watch from Android onslaught

Without data advantage, cheap wristputers struggle to do more than tell the time

The Christ(watch) is right

Apple today announced a €1.7bn plan to build and operate two data centres in Europe, each powered by 100 per cent renewable energy. The facilities, located in County Galway, Ireland, and Denmark’s central Jutland, will power Apple’s online services including the iTunes Store, App Store, iMessage, Maps and Siri for customers across Europe.

No, obviously, these data centres are not just about the Christometer. But they are deeply related to it. We know that it will interact with Siri for example: but we also know that Siri doesn't actually do any voice recognition or processing on the local machine (or at least not much) and the database of Siri's answers is something that is matched up remotely. The processing power for that part of the package is thus in those data centres, as a lot of other bits and pieces of functionality will be, I am sure.

That, in its turn, produces a barrier to entry to the low-cost and low-capital competitors. Sure, it depends upon what people actually value in a wearable. Some, obviously, will value that it says “Apple” on it and this, as a Veblen Good, validates their social position.

Others will think it's a pretty nifty way of telling the time or of noting when someone's sent them a text. That market the cheapo boys can play with. But if the value of the iGadget really comes from what it can do when connected, then all of that becomes very much more difficult. For to provide the infrastructure to do all that connected stuff is an expensive proposition, far more so than getting some sweatshop to knock out a few thousand pieces of something.

When we were all talking about the sapphire factory a couple of years back I noted that Apple really does have that vast mountain of cash lying around. And that it makes great sense for them to deploy that in a manner that gives them a continuing competitive advantage. As it happens, that sapphire idea didn't work out too well, but the strategy was still there.

What can we do, because we've got so much cash, that a competitor cannot do? There, it was “We can leapfrog into a new material”. Because they could pre-finance the production run, it was possible (although it wasn't as it turned out, but that's another matter) to pay for the leap upwards in sapphire manufacturing volume (and, sorry, technical bit, boule size, meaning that one could get screen-sized sheets instead of just watch-sized ones) and thus bring that price down. And do so on an exclusive basis for some years.