12 April 2014Investors.com:
Apple could be looking to health insurance companies to help subsidize its rumored iWatch fitness bands in the same way that wireless carriers subsidize the cost of smartphones.
That speculation comes from Timothy Arcuri, an analyst with Cowen & Co. He raised the possibility on Friday in a research note that discussed possible product launches, including the iWatch, later this year from Apple.
“We continue to believe it is possible the product (iWatch) is backstopped by some sort of insurance subsidization model similar to the carrier subsidization model for iPhone,” he wrote.
Do you think Apple likes the subsidy model for iPhones? Apple was basically forced down that route with the iPhone because the market was already entrenched such that subsidies were expected. If the market was a clean slate1, I don’t believe that Apple would have wanted to instate a relationship in the market that was so reliant on the carrier.
Therefore, in the watch/band market, I think subsidy models are the last thing in Apple’s mind. If Apple can ship the product for a reasonable price2 without any strings attached, then that’s what they are going to do.
Dealing with middlemen is too much complexity and frustration. As an outsider, the concept of collaborating with health insurers sounds messy. I would hate to organise something like that and I don’t think Apple would like it either.
Down the line, perhaps there is the potential for health insurance rebates but that can’t be the the primary go-to-market strategy. It just can’t be.
1 Like it is in the smartwatch market.
2 The latest rumours suggest a $260 price point, which I would classify as reasonable.