Will Apple Pay Ignite The Apple Watch?

Apple has ordered between 5 and 6 million Apple Watches for the device’s debut in April, the Wall Street Journal reported on Tuesday (Feb. 17). And it increasingly looks like Apple’s wearable will stand or fall on the strength of Apple Pay.

Half of the Q1 order from Quanta Computer in Taiwan, which is building the devices for Apple, will be the low-end Apple Watch Sport, which starts at $349. Another one-third of the production run will be the the more expensive Apple Watch, with the luxury Apple Watch Edition model filling out the remainder, according to sources the Journal didn’t name.

If Apple sells 5 million Apples Watches in 2015, that will more than double the size of the wristband wearables market. In 2014, 4.6 million smart wearable bands shipped, Canalsys reported last week. But only about 720,000 used Google’s Android Wear smartband OS. Almost all of the rest were fitness-oriented bands, a category dominated by FitBit with just under 3 million in unit sales.

Health and fitness was also the category Apple originally was targeting with its Watch, along with the HealthKit system that would collect and store the data. But security problems for the data — which might have fallen under federal HIPAA medical-information security regulations — surfaced early. Meanwhile, inside Apple, developers had trouble getting medically useful readings from the Watch’s sensors, according to the Journal.

That leaves payments as the strongest functional draw for the Apple Watch. While Apple CEO Tim Cook has touted the wide range of the Watch’s capabilities, areas like fitness, reminders and activity tracking are already well covered by cheaper devices.

But the Watch should solve one of the nagging problems that using Apple Pay with an iPhone hasn’t yet shaken: the perception that it’s still not much more convenient than using a plastic card, since the user must still take out the phone and punch in a PIN. That reportedly won’t be necessary with the Apple Watch — once the watch is on the user’s wrist and a PIN entered into the phone, payments can be made with a single click on the watch without any extra steps.

That would actually be substantially simpler and faster than pulling out and swiping a traditional mag-stripe card. It could also make the difference in Apple Pay use among users who could be using the payments system now but don’t. In late November, InfoScout found that 90 percent of iPhone 6 owners hadn’t even tried Apple Pay, with the majority saying they didn’t understand how it worked or didn’t see an advantage to using it.