Apple Inc. (AAPL) - Get Report Chief Operating Officer Jeff Williams gave AT&T Inc.. (T) - Get Report a plug during the tech company's special event on Tuesday, as the company announced the first Apple Watch that can connect directly to a wireless network.
From a stage in Apple's Steve Jobs Theater in Cupertino, Calif., Williams placed a call to a paddle-boarding colleague on a lake via AT&T's network. The Apple Watch gives the wireless carriers a shiny new device to market to subscribers, and an opportunity to tack on extra service fees. The device should also resonate with wireless carriers, who can play an important role in selling the devices.
AT&T, T-Mobile USA (TMUS) - Get Report and Verizon (VZ) - Get Report all announced they would be charging $10 per month for service for the $399 LTE-connected phone, and offering the first three months free. AT&T and Verizon are also waiving activation fees. The Apple Watch Series 3 without an LTE connection starts at $329.
AT&T Inc. gained 0.5% to $36.46 on Wednesday, after gaining 1.5% on the day of Apple's product release event, while Verizon rose 0.4% to $46.97, following a 1% increase Tuesday. T-Mobile US Inc. fell 0.2% to $62.85 Wednesday, after dropping 0.1% Tuesday, and Sprint decreased by 0.4% to $7.86 on Wednesday, on top of a 3.8% gain the day before.
The Apple Watch remains a small part of Apple's business. IDC expects Apple to ship 14.5 million watches this year, up from 11.3 million last year. For context, Wall Street expects Apple to sell 142 million iPhones this fiscal year and 170 million next year.
Apple's Williams played up the health and fitness capabilities of the water-proof watch. Apple redesigned the workout app and made updates to what Williams called "the most used heart-rate monitor in the world."
The new heart rate app displays more information, including resting and recovery heart rate. It will also notify wearers if their heart rate rises while they are not active, and will track heart rhythm. Through a partnership with Stanford University, Apple will analyze heartbeats and notify users of arrhythmia, or irregular heart rhythm.
Healthcare providers could put the Apple Watch on more wrists. Aetna Inc. (AET) has an agreement that provides Apple Watches to customers, but did not disclose details about how much of a subsidy it provides. Insurers are playing a role akin to the wireless carriers that helped make the iPhone a success, JPMorgan Securities LLC analyst Gokul Hariharan suggested in a report. "[W]e believe there could be more potential for growth if Apple launches partnerships with insurance companies and health management vendors to subsidize the Apple Watch -- much as telecom carriers subsidize handsets," Hariharan wrote.
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