The market may have loved Apple's (NASDAQ:AAPL) blowout quarterly report on Tuesday afternoon, but this doesn't take any of the pressure off of April's highly anticipated Apple Watch. If anything, the report actually places even more weight on the tech giant's initial foray into wearable computing.
Let's go over some of the reasons why Apple needs it's new watch to be a smashing success.
1. There is too much riding on the iPhone
Apple's revenue during the holiday quarter may have soared 30%, but back out the iPhone and sales actually slipped 7%. The iPhone is hot -- and that's awesome -- but it's also 68.6% of the revenue mix at Apple.
Apple needs to earn its innovator wings again. With iPad sales plummeting and the iPod no longer even worthy of being its own line item in Apple's quarterly summary data table it's time for something new to take the weight off of the iPhone.
2. The iOS newbies are ripe for the picking
The only thing better than Apple selling a record 74.5 million iPhones is that a record number of them are also new to the tech giant's mobile platform.
"We had the highest number of customers new to iPhone last quarter than in any prior launch," CEO Tim Cook boasted on Tuesday night. "The current iPhone lineup experienced the highest Android switcher rate in any of the last three launches."
In other words, there are a lot of people making their initial investments in Apple products. The long overdue move to introduce larger screens to keep up with the competition is predictably paying off by eliminating their objections to going Apple. This leaves them ripe to to absorb other Apple products, and it's not iPads or iPods. Mac sales should benefit, but the no-brainer is an accessory that works in cahoots with the phone itself. Yes, we're talking about the smart watch.
3. Let's bring back the halo effect
It's not a coincidence that the Mac experienced a resurgence shortly after the 2001 introduction of the iPod. The media player worked with Macs and PCs, but it made Apple desktops and laptops cool again. Don't be surprised if we see this happen with the Apple Watch.
Ultimately the purchase of an Apple Watch is a commitment to iOS. It's unlikely to work with Android or other devices, cementing an iPhone user in place. Wireless carriers make it brutally easy to switch sides every two years, but someone buying an Apple Watch is that much more invested to sticking to the iPhone at the next upgrade cycle.
4. Show Google how wearable computing is done
It's not a surprise to see Google (NASDAQ:GOOG) backpedalling from Google Glass. The search giant suspended sales of its high-tech specs to developers. They cost too much. They were too creepy. They weren't fashionable enough.
However, this also opens the door for Apple to make a splash by showing how wearable computing can be fashionable and useful. Skeptics will argue that rival smart watches have failed, but that hasn't deterred Apple in the past. There's always time to get it right.
5. Apple can use a new winner
The only two product lines posting improving sales this holiday season were iPhones and Macs. We're talking about the smartphone that it introduced nearly eight years ago and its legacy computer business that's obviously even older.
The iPad has been shrinking for a year, joining the iPod that's been diminishing in popularity for years. Apple TV seems to be holding its own, but it's not substantial enough to merit being singled out as a category. It's lumped together with the iPod in the "other products" catchall that posted an overall decline.
Apple can use another winner. The Apple Watch won't lend itself to the same upgrade cycle as the iPhone. There won't be too many people buying a new one every two years. However, if it succeeds it will give Apple a more recent product introduction to brag about.