Report: Next Apple Watch could have cellular connectivity

The next Apple Watch may not need to be tethered to an iPhone to be connected to a cell network.

Citing unnamed "people familiar with the matter," The Wall Street Journal said Apple is working to add cellular connectivity as well as a faster processor to the next generation of its wearable. The report follows Apple's announcement last week that starting June 1 all new Apple Watch apps must be native, eliminating the need to transfer data between the phone and the watch.

As the Journal points out, sales of the Apple Watch are double those of Apple's first year of iPhones sales. And Apple's device is clearly the dominant smartwatch on the market, claiming 52 percent of worldwide shipments last year despite only launching near the end of April, according to estimates from Juniper Networks.

But smartwatches remain "a category waiting for a market," a Juniper analyst observed earlier this year, and it's unclear whether demand for the wearables will increase anytime soon. The lack of a compelling use case continues to shackle the overall market, and sales have largely been driven by lower-priced devices with basic functionality such as notifications and tracking functions.

Apple has yet to release sales figures for the Apple Watch, leaving analysts to speculate just how many devices the company has sold, and a recent price cut has only fueled speculation that it is under-performing. KGI Securities expects Apple Watch shipments to fall by more than 25 percent this year, noting that factors such as a limited battery life and a lack of truly useful apps are holding back sales.

The company is widely expected to introduce a second generation of its watch later this year, and some seemingly minor upgrades could prove very effective. A device with standalone cellular connectivity might appeal to users who don't own an iPhone, and the combination of native apps and a faster processor would surely result in more responsive apps. Of course, such a device would likely require users to purchase a data plan for the gadget -- a situation that would probably turn off some potential customers but would undoubtedly cheer carriers like AT&T and Verizon that offer shared data plans that can be extended to smartwatches.

It's unlikely that any new Apple Watch is going to blow open the door to the smartwatch market. Mainstream consumers clearly aren't motivated to spend a few hundred dollars or more for some basic functions that can be performed by smartphones they already carry everywhere they go, and the app ecosystems for smartwatches are still very much in their early days. But adding cellular connectivity and some other features could spur the development of apps that may finally entice consumers to bring connectivity to their wrists.

To be clear, Apple isn't the first company that would add a cellular connection to a smartwatch. Samsung, LG and others already sell watches that connect to cellular networks.

For more:
- see this Wall Street Journal report

Related articles:
Report: Apple Watch sales expected to fall by more than 25% this year
Fluent: 'Consumer adoption is there' for Apple Watch
Apple Watch dominates with 52% share in 2015, but remains 'a category waiting for a market'
Samsung, Motorola, others announce new smart watches, but only 13% are predicted to have cellular
Apple Watch sales to expand to all of Best Buy's stores in September
Apple ships 47.4M iPhones, ASPs jump to $660
Apple Watch sales dropping off, according to research firm Slice

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