Tech

What the Apple Watch launch was REALLY about

Among the glitz and glamor of the Apple Watch launch, one key element was overlooked: what the event signaled about the tech giant's ambitions in China.

It was no coincidence that the first messaging app demonstrated on the Apple Watch was WeChat, China's biggest messaging app, as opposed to WhatsApp, for example.

"It was no accident that WeChat was highlighted and the whole show opened with a video presentation of the latest Chinese store opening," Ben Wood, chief of research at CCS Insight, told CNBC by phone.

The WeChat app on Apple's iWatch
Apple

In addition to the lower-priced Apple Watch models, the company also unveiled the "Edition" – an 18 karat gold version that starts at $10,000, which could appeal to fans in China and the Middle East.

Apple focused heavily on China in 2014 and the bet paid off. It now has 21 stores in the country and is expected to open more.

The Cupertino, CA-based company was the second-largest smartphone vendor in China during the fourth quarter of 2014, with 12.3 percent of market share, according to IDC. This marked a 99.7 percent year-on-year rise in unit shipments.

Meanwhile, revenue from China hit $16.1 billion in the first quarter of fiscal 2015, a 70 percent rise from the $9.4 billion recorded the year before.

The company's larger-screen iPhone 6 and 6 Plus drove sales, following a deal with China Mobile at the end of 2013 to bring the devices to the country.

The Apple Watch will be rolled out in China at the same time as the U.S., highlighting how key a market it is. To position the Watch as a luxury timepiece, Apple is selling it through its own stores but also major retailers such as Selfridges in London. Similar partnerships in China will be crucial, analysts said.

"The first strategy it has is to roll out more of its own stores, then partnerships with operators and subsidies for the Apple Watch will be the longer term goal," Neil Mawston, executive director at Strategy Analytics, told CNBC by phone.

"The key to their iPhone was heavy subsidies and if Apple can replicate that it should mean good sales in China for the Watch."