August 15 - According to a report by U.S. financial news website CNBC, Apple executives recently held closed-door talks with U.S. insurer Aetna, attended by information and technology staff from several hospitals. The meeting concerned the bulk purchase of Apple Watches. Apple plans to put an Apple Watch on the wrist of every one of Aetna's more than 23 million insurance customers.
Apple has never disclosed specific Apple Watch sales figures, mainly because sales have not met Cook's expectations. Apple is still trying various ways to stimulate Apple Watch sales.
Upstream suppliers revealed that Apple will release the Apple Watch Series 3 smartwatch in the second half of 2017, which can connect directly to cellular networks. Some new models of the Apple Watch will be equipped with LTE chips supplied by Intel to reduce the Apple Watch's dependence on the iPhone. The release may come at Apple's annual fall product launch event. This year's Apple Watch 3 will be jointly manufactured by ODM vendors Compal Electronics and Quanta.
Sources revealed that the Apple Watch 3 is about to pass the final design phase and enter the sample-testing phase. The Apple Watch 3 will be one of this year's hottest new products. It will reduce dependence on the iPhone, feature a built-in Intel baseband, support 4G networks, and be able to access the internet and make calls independently, with major changes in appearance. The Apple Watch 3 also has many new features, such as supporting new workout types like yoga, skiing, water polo and wrestling, and may also bring entirely new sensors, such as support for blood glucose monitoring.
It is reported that the Apple executive leading these talks is named Myoung Cha, who is in charge of health projects within Apple. How many Apple Watches Aetna will purchase from Apple, and whether Apple will offer discounted prices, cannot be confirmed at present.
Apple CEO Cook had hoped the Apple Watch would become an epoch-making product as important as the iPhone. According to statistics from market research firm Canalys, in the global smartwatch market Apple's sales have fallen to third place, behind Xiaomi and fitness-band maker Fitbit. Canalys said that in the second quarter of 2017, global smartwatch sales grew 8% year on year, with Xiaomi posting the highest global sales at 3.5 million units, followed by Fitbit at 3.3 million units, down 34% from a year earlier. Meanwhile, Apple's smartwatch sales fell to third place at about 2.7 million units.
Aetna is very keen on Apple's new watch. Previously, as part of a corporate wellness program, Aetna provided Apple Watches to its 50,000 employees. Now Aetna plans to go further, offering free or even discounted Apple Watches to its more than 20 million health insurance customers.
Sources said that by providing Apple Watches, Aetna hopes all of its health insurance customers will engage in a more active and healthy lifestyle and better monitor their exercise, health, diet and other conditions.
When the first-generation Apple Watch came out, Apple went down the wrong path, launching it with a fashionable luxury concept, even advertising in European fashion magazines or commissioning luxury stores to sell it on its behalf. But the Apple Watch did not become a must-have accessory for fashion circles.
With the second-generation product, Apple made a major adjustment, repositioning it as a health and fitness device aimed at a more precise consumer group - people who care about health and exercise. Apple integrated a GPS chip to better measure exercise distance, and improved water resistance to suit swimming enthusiasts. Apple also partnered with sports brands to launch customized versions.
For subsequent products, Apple has decided to continue strengthening health and fitness features. Multiple media outlets have reported that Apple is internally developing technology to measure blood glucose without piercing the skin, which will be built into the Apple Watch in the future. If the technology is successfully realized, it would be a major breakthrough in the medical field and bring good news to the large number of diabetes patients around the world.
Foreign media noted that if the huge procurement deal with Aetna is reached, it will bring a huge stimulus to Apple Watch sales. Although Apple Watch sales are growing and it leads the smartwatch market in share, the industry believes that fitness bands and smartwatches are a niche market without much room for growth.
Countless companies making smartwatches and fitness bands have previously gone bankrupt, collapsed or ceased production. Motorola Mobility also announced it would stop follow-up watch products. The recent bankruptcy liquidation of veteran fitness band maker Jawbone shocked the tech industry. Smartwatch maker Pebble also suddenly died.
To date, Aetna's share price has risen more than 25%, while Apple has risen more than 38% and the S&P 500 index (SPX) has risen more than 10% over the same period.
On the Fortune 500 list, Aetna ranks 130th (142nd last year, and fourth in the United States). Aetna recently raised its full-year earnings outlook, lifting adjusted full-year earnings per share by 60 cents to between US$9.45 and US$9.55. Aetna attributed its second-quarter profit growth to disciplined pricing and a growth strategy that is working. Aetna's second-quarter revenue fell 2.5% year on year to US$15.5 billion, reflecting lower premiums in Aetna's health care segment as it continues to withdraw from Affordable Care Act markets. Despite the decline, Aetna's commercial and government businesses delivered higher margins, and enrollment in its health care products is growing, all of which boosted its revenue.
Aetna's second-quarter profit was US$1.2 billion, or US$3.60 per share, compared with a profit of US$790.8 million, or US$2.23 per share, in the same period last year. On an adjusted basis, Aetna's second-quarter earnings per share were US$3.42, up sharply from US$2.21 in the same period last year. Analysts surveyed by Thomson Reuters had on average expected Aetna's adjusted second-quarter earnings per share of US$2.35.
Source: JRJ (Finance Home), 2017-08-17