Smartwatches decline in competitive electronics market

Home Variety Smartwatches decline in competitive electronics market

By Josiah Mayo

It is 2017, and it is impossible to escape technology. While walking through any public space, one is bound to see swarms of people honed in on their smartphones or, more recently, smartwatches. But is the desire to own both a smartwatch and a smartphone weakening in 2017? Smartwatch sales were cut in half from 2015 to 2016, according to a report from the International Data Corporation (IDC), released in Oct. 2016.

Owning a flashy, brand-new, touchscreen smartphone was once a trend, but has now become the rule. Smartwatches were designed to make the smartphone experience better—and they have, though they may not stand out enough from smartphones in terms of utility.

Consumers want to have a clear understanding of a smartwatch’s purpose, and experience is key to developing that understanding. Fitness has been a large focus for smartphone manufacturers because of the need for a specific use-case scenario.

There is a distinct difference between a smartwatch and a fitness tracker. Most of the time, a smartwatch includes its own fitness tracking features built into the watch, such as a pedometer for distance tracking, a heart rate monitor and other fitness activity software. However, smartwatches are capable of more than fitness tracking. The Apple Watch and many Android Wear watches feature a gyroscope for positional awareness, an app-based ecosystem for loads of software features and programs, as well even multi-media displays. Some smartwatches are even capable of running games.

A fitness tracker is more restricted. Usually, fitness trackers feature a limited display that shows only the time, while hosting capabilities such as distance tracking and heart rate monitors. They are designed for users who don’t want all of the bells and whistles of a smartwatch but enjoy the benefits of tracking their fitness goals. Not all of these trackers are worn on the wrist: some can be worn around the chest or the waist. A lot of the fitness features can be viewed and tracked on a larger display in a downloadable smartphone app. FitBit is company that utilizes this technique to a great extent.

“Having a clear purpose and use case is paramount, hence many vendors are focusing on fitness due to its simplicity,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, in an IDC press release.

Ubrani explained that current smartwatches are clearly not for everyone at this point in time. This may change as the smartwatch industry and experience changes.

But there may still be hope for the smartwatch arena with an estimated increase of 18 percent in smartwatch sales in 2017, according to VentureBeat. The traditional watch industry is projected to continue to lose sales, one reason for the cause of potential smartwatch growth.

A report released by Canalys, a market research firm, says that the value of the smartwatch market will be equal to two-thirds of the Swiss watch market by the end of 2017. The report notes that the projected increase is thanks to Android Wear smartwatches. Fossil Group, a fashion accessory company, is a big name mentioned that is currently making efforts toward the future of wearables.

Fossil Group understands the decrease in sales of traditional watches and is looking to get ahead of this trend. The company aims to use competitive strategies to utilize the smartwatch space for its benefit. Other companies, such as Swatch, have been slow at adapting.

The Apple Watch is currently a force to be reckoned with in the smartwatch market. Sales over the holidays created a resurgence from year-over-year decline, a sign that smartwatch popularity may be increasing with consumers. Apple regained 63 percent of the market share Q4 2016, according to Fox News Tech.

The boost in Apple Watch sales could be due to the added features and improvements made to the second iteration of the watch. The Apple Watch is currently offered in two models, Apple Watch Series 1 and Series 2; this divide has allowed Apple to have a lower-priced offering. The additions seem to have solidified the utility and unique purpose of owning a smartwatch.

The smartwatch category began in 2012 with a kickstart campaign launched by Pebble, a smartwatch company that has now ended its operations and is “no longer producing or selling smartwatches,” according to Pebble’s website. The company made multiple iterations of its watch over the years of operation but were not very successful.

However, smartwatches didn’t capture the attention of the average consumer until Apple came to the table with the Apple Watch in the spring of 2015. Apple’s watch soon took the majority of the market share. The tech giant controlled 70.2 percent of the smartwatch market by Q3 2015 and subsequently, maintained that dominance into Q3 2016 with 41.3 percent.

Other companies such as Samsung, Garmin, and Lenovo have tried to compete with Apple in this space, struggling to reach a majority of the market and take the throne away from Apple. Garmin and Samsung are the only companies that grew year-over-year from 2015-16. Garmin climbed from 2.3 to 20.5 percent to claim the second leading position in the market.

The market was flooded with new wearable technology that caught the eye of the consumer, while also creating confusion. Many different types of wearables entered the market, including both smartwatches and stand-alone fitness trackers like the FitBit that had people asking questions.

So what does the future hold for smartwatches? This year’s projections may not come to fruition. Only time will tell as the first quarter of 2017 wraps up and new smartwatches such as the TAG Heuer watch demand a premium to own.