Does Anyone Really Want a Smartwatch?
Asking about the state of the smartwatch market makes a big assumption—that there actually is a smartwatch market. This is a much bigger leap than you might think. The category itself is vague: At this point it includes almost anything that attaches to your wrist, has some mix of sensors, and offers some kind of interface. Considering how new it all is, is it any wonder consumer desires and behavior are poorly understood? It’s going to take a lot more than saying there’s a smartwatch market to actually create one.
According to a new report by market researcher Creative Strategies, fewer than 2 million smartwatches have been sold as the category has begun gaining traction over the past few years. Creative Strategies defines a smartwatch narrowly, including only devices that most people would instantly recognize as a wristwatch. (Worldwide sales of digital wristbands of all kinds are in the tens of millions.) But what tech companies are aiming for is much greater: Some 1.2 billion wristwatches are sold every year. If even 10 percent of those billions of watch buyers could be persuaded to buy a smartwatch, that would be tremendous growth.
Knowing which 2 million people bought smartwatches can get us closer to identifying how much demand might really exist. According to Creative Strategies, these devices are most popular with the wealthiest quartile of 25- to 34-year-old men. But that’s not the smartwatch demographic—that’s the everything demographic. The people buying smartwatches today are the same people who buy everything new, fashionable, and exciting, whether it serves a legitimate need or not. There’s no hard data on how many of these smartwatches end up in drawers instead of on wrists after the novelty wears off, but Creative Strategies estimates the number of devices that see long-term use is “well below the total sales figure.”
To make smartwatches a long-term companion device and not simply a quick hit, manufacturers and developers are going to need to make them relevant and necessary for daily activities. The first question asked about any smartwatch needs to be “What human need is it actually solving?” Dennis Miloseski, a vice president for design at Samsung, said at a panel on the smartphone market at the Consumer Electronics Show in Las Vegas. Pushing notifications from one screen to another is not nearly enough, and adding meaningful functionality to a bracelet that consumers will want to wear every day is not a challenge to be taken lightly.
During the panel discussion, it became clear that even the large multinational corporations poised to dominate an emerging smartwatch industry don’t agree on what will hook mainstream consumers. Some blame the lackluster reception on the absence of a “killer app.” Others say the physical designs still haven’t found the balance of function and aesthetics needed. It’s not even clear whether smartwatches will be adopted first as business tools, as personal relaxation devices, or as whiz-bang fashion statements.
There have been surprisingly few new smartwatch announcements at this year’s CES, for which the coming Apple Watch is probably to blame. Apple is expected to sell millions of Watches in the first year, resulting in billions of dollars of revenue. This will eclipse the entire smartwatch market to date, and we can’t fault other players—big and small—for letting the dust settle before making any more big plays.