(Bloomberg Business) — In a lab shut off from communication with the outside world and where visitors can't bring in a pad of paper, let alone a phone, Apple Inc. (Nasdaq:AAPL) has given some companies special early access to Apple Watch.
Bayerische Motoren Werke A.G., Facebook Inc., United Continental Holdings Inc. and others have spent weeks at Apple's headquarters in Cupertino, California, working hands-on with the smartwatch to test and fine-tune applications that will debut alongside the device next month, according to people familiar with the process, who asked not to be identified because of non-disclosure agreements.
Apple, which will share more details about the gadget at a March 9 event, uses extreme measures to keep the work secret. No outside materials can be brought in to the labs with the test watches, a person who attended said. The companies, sometimes sharing a room, must bring in source code for their apps on a computer hard drive that can't leave Apple's headquarters. To prevent information from leaking out, Apple is storing the code and sending it to the companies closer to the watch's introduction date, the person said.
"There's a lot of confidentiality," said Stephen Gates, a vice president and creative director for Starwood Hotels & Resorts Worldwide Inc., which is building a watch application to unlock hotel-room doors. Apple featured Starwood's application in September, when it first announced the watch. Gates said he's made several trips to Cupertino to develop the software, but declined to comment on what those visits included.
As Apple's first new device since the iPad in 2010, the stakes are high for Apple Watch, and the sophistication of the apps available is critical in wooing buyers. Just as the App Store has been a key reason for the iPhone's success, tools for Apple Watch will help determine how customers use the gadget and whether it will be a sales hit. The watch must be paired with an iPhone to fully work, and anything less than seamless integration may alienate potential customers.
Tim Cook, chief executive officer of Apple, after unveiling the Apple Watch during a product announcement at Flint Center in Cupertino on Sept. 9, 2014.
Apple Chief Executive Officer Tim Cookwill highlight watch applications at the event in San Francisco. Amy Bessette, a spokeswoman for Apple, didn't respond to a request for comment ahead of the event. Jessie Baker, a spokeswoman for Facebook, declined to comment, as did United spokesman Rahsaan Johnson and a BMW representative.
Optimism over Apple's new products, including the watch, has helped send the company's shares to record highs in recent weeks. Sales of the new device in the first fiscal year may reach almost 14 million, according to the average estimates of five analysts surveyed by Bloomberg. Researcher Strategy Analytics projects Apple will take 55 percent of global smartwatch sales this year, when total shipments may reach 28.1 million units, up from 4.6 million in 2014.
"Initial demand could be stronger than the iPhone and iPad when they launched," Katy Huberty, an analyst at Morgan Stanley, wrote in a note to investors this month. She's estimating that Apple may ship 30 million watches in the first 12 months, helping the company generate more than $6 billion in additional revenue.
Apple has made the yet-to-be-released watch available to some companies so they can test out their apps, check for glitches and adjust the tools to the watch's design. Hundreds of applications may immediately be available once the Watch reaches stores, according to Jim Suva, an analyst at Citigroup Inc.
A big challenge for Apple and its developers is building applications that are useful without being annoying. Apple has recommended that developers be judicious about interrupting people with constant alerts that will buzz their wrist or drain the battery. If desktop computers can be used for hours at a time, and smartphones for minutes, the watch is being measured in seconds. Apple is suggesting developers design their applications to be used for no longer than 10 seconds at a time.
"Not every e-mail that lands in your in-box deserves to jerk you away from what you're doing at that moment in time," said Shawn Carolan, the co-founder of Handle Inc., an e-mail and calendar productivity app, and an early investor in Siri, the voice-recognition company Apple bought in 2010. "If your watch is buzzing every 15 seconds with a notification you are going to go crazy."
