2015, often touted as being the year of wearables devices, has come and gone, yet smartwatches have failed to become mainstream. And while that statement mostly holds true, it seems that for the longest time, our focus may have been tied to the wrong end of the wearable spectrum. A recent report on Wearable Devices Market Q1 2016 by Kantar World Panel has revealed that across the US and EU markets, Fitness Trackers are going toe to toe with smartwatches, beating them quite significantly in the US market and falling just behind in the EU scene.
One of the more interesting findings of this report has been the fact that the wearables industry has in a very nondescript manner infiltrated the consumer tech sphere in most mature smartphone markets. 1 out of 10 people owns either a smartwatch or a fitness tracker of some sort in the US, Italy as well as Australia. While the percentage tapers off a bit in the EU4, 6.6% of market penetration is not really shabby for a product category that everyone has just sort of written off! What more secrets does the wearable market hold? Read on as we investigate!
A Brief Look At The Global Wearable Industry
Despite being quite similar in smartphone penetration figures, the US takes a giant leap ahead in terms of wearable penetration in comparison to the 4 major European smartphone markets, Great Britain, Germany, France and Italy that make up the EU4. At 12.2%, the US has nearly double the penetration of EU4 at 6.6%! However, there is more to this story that just the number of wearable owners as the split between fitness bands and smartwatches switch pretty dramatically as we change geographical locations.
First up, for the US markets, Fitness bands establish a strong lead with every 3 out of 4 wrist wearable falling into that category. Among the many competitors in the wearable space, Fitbit has clearly placed itself in the front with a market share of 61.7% of the US installed base. Their USP? A clear value based proposition complete with an easy to use UI and App ecosystem and great battery life. In comparison, despite all the hype surrounding it, the Apple watch holds a meager 6.8% of the US wearable space.
But don’t count smartwatches out yet as they flip the tables when it comes to the EU, taking the lion’s share of the market with 55.2% of the pie compared to 22.9% of the US. However, Fitbit continues to dominate with 18.5% of the installed market but this time, the smartwatch makers Apple and Samsung are close at their heel with 14 and 11.6% respectively. The UK and the US being close neighbours that they are, share a common skew in terms of the split between smartwatches and fitness bands, with the latter having a slight edge at 54.3% compared to the 45.7% of the smartwatches.
“Our first smartwatch data set reflects a relatively low level of market penetration – not unexpected
for what is still a young category,” said Shannon Conway, wearable tech analyst for Kantar Worldpanel ComTech.
So where does the feature hold for the smartwatch and wearable market at large? We discuss just that in our closing segment.
Final Thoughts on The Future of Wearables
The wearable market is predicted to be worth a whopping 28.7 billion in 2016 with smartwatches contributing as much as $11.5 billion to the cause. One of the interesting things to note about this Gartner report is that fitness bands have been classified into the smartwatch category as well. And while this report has highlighted the popularity of Fitbit in western markets, one of the major players in the Fitness Market is Xioami with their Mi Band lineup of fitness trackers.
With an affordable price tag of 15$, Xiaomi may have cracked the code for the fitness tracker-smartwatch product line and their Xiaomi MI Band 2, if it manages to make its way to western shores will far outshine the 10 million annual sales figure of the previous Mi Band. So why are we betting so heavily on Xiaomi and other fitness trackers to trump the traditional smartwatch in terms of sheer volume of devices shipped? The answer lies in the four points which make up a good wearable device, which we have outlined briefly below.
- Affordability: Most smartwatches cost upwards of $300 with some of them nearly costing as much as a smartphone that they’re supposed to be companions too. Spending so heavily on accessories is not feasible for most consumers, and thus, we see that fitness trackers with their mostly sub $100 pricing find much more success among average users.
- Battery life: Despite having sold more than 12 million units, one of the most criticized features of the Apple Watch other than the exorbitant pricing has been the terrible battery life. With most fitness bands providing battery lives that are in excess of a fortnight, the smartwatches with their 24-48 hour battery life are simply not good enough.
- Blending in: Despite 31.9% of all smartwatches in the US and 39% in the EU being aimed to replace traditional watches, yet even the higher end Apple Watches or the Tag Heuer premium Android Wear smartwatch hasn’t been able to replace the timeless appeal of a classic watch like a Patek Philipe in the eyes of a connoisseur. Apple though has been doing quite well in this regard with 43% in the US and 49.6% of Apple Watches in the EU being bought to replace traditional timepieces.
- Practical Usability: While fitness trackers are meant to be glanced at a few times every day, smartwatches are not meant to be tucked away and forgotten. The purpose of having a touch-enabled computer on your wrist is to interact with it more so that you don’t have to always use your smartphone. In that regard, the app ecosystems of both Android Wear and the Apple App Store has been slow to release relevant apps that can translate the smartwatch from a cool gadget to a must have.
“For both smartwatch and fitness band buyers – brand, ease of use, and functionality are the top drivers of purchase, outweighing both design and cost,” said Shannon Conway.
However, the future is not all grim for the smartwatches. With the introduction of NFC-based wireless payment methods like Samsung Pay and Apple Pay, we can hope that these two OEMs will make the transition to payments via their smartwatches sooner rather than later. Amidst all of this, one major cause of concern remains at large.
The current market leader in smartwatches Apple has recently released a statement saying that they expect the average life an Apple smartwatch to be around 5 years. For a smartphone accessory that costs nearly as much as an iPhone 6, in select cases, even more; the end question becomes, does the price justify the product? For the average user, it does not, as we see lower cost fitness bands being more common as gifts, 43.1% compared to the higher ASP bearing smartwatches at 33.3% in the US.
And while smartwatch manufacturers have been making ever more premium bodies for their products and cramming in more fitness-centric functionality than fitness trackers themselves, the juggernaut of fitness bands remains unstopped. While the long time future remains unclear, for the near future, we hope to see the cheaper fitness trackers continue beating out the smartwatches in terms of devices shipped.
