Narrative: Wearables are Struggling
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Narrative: Wearables Are Struggling (Dec 27, 2016)
Written: December 27, 2016
The wearables market was a hot one for several years, with lots of industry observers and players talking up the enormous potential. But for now we seem to have stalled at a point far short of those lofty goals. In reality, we now have several distinct wearables markets:
- dedicated fitness trackers largely between $80 and $200, a category dominated by Fitbit
- dedicated fitness trackers at much lower price points, dominated by Chinese vendors
- smartwatches, a category currently dominated by Apple, with Samsung the only major other player, and Android Wear becoming increasingly irrelevant
- GPS-centric smartwatches, where players like Garmin and other specialists have carved out something of a niche, albeit much smaller than the broader smartwatch market which Apple dominates.
At this point, it’s clear that the wearables market is smaller and more specialized than once thought, though it won’t necessarily remain stuck there. Apple has refocused its efforts around the Watch with a health and fitness strategy, but there’s still potential for apps on the Watch to become more meaningful in future.
Tag Heuer Connected Modular 45 hands-on review – Wired (Mar 17, 2017)
Earlier in the week, I wrote about Swatch’s smartwatch operating system and components, and in passing referred to Tag Heuer’s Android strategy. It’s now in the second phase of that strategy, with a highly modular and customizable approach this time around, and a modest goal of selling 150,000 of these watches, compared to just over 50,000 of its first attempt. That’s obviously a tiny fraction of the overall smartwatch market, and it’s hard to see how it’ll make money at this scale with this much customization. Apple has offered the most customization of any tech-centric smartwatch to date by far, but this Tag watch seems to take the concept much further, which may be appealing to potential customers, though the watch itself looks incredibly thick and bulky, even for a Tag.
It’s fascinating to think about this move in the context of the history of Swatch. Though the company incorporates much older brands, the Swatch name and brand arose in the early 1980s out of the Swiss watch industry’s previous crisis: quartz watches from Asia. Those watches caused a massive decline in the Swiss watch industry as cheap, highly accurate watches from Asia flooded the market. The Swatch brand was created to compete with these quartz watches, offering a simpler mechanical watch with cheaper materials that could compete with the new entrants, and it worked. Now, it appears Swatch wants to defend against the new crisis – smartwatches eating market share – with its own entrant, based on technology co-developed with a Swiss university that specializes in miniaturization. I may be biased, but suspect it’s easier for the tech industry to learn about watches than it is for watchmakers to get really good at technology, even with some help. I’m skeptical that this move will work out, but given how poorly Android Wear has fared, it certainly can’t hurt, and may well do better than competitor Tag Heuer’s Android strategy.
This is a good follow-up to this morning’s item about the new Android Wear watch from Huawei, and argues much as I did that other smartwatch makers are largely failing to learn the lessons of or compete effectively with the Apple Watch. It frames the discussion in terms of the compromises and tradeoffs watchmakers choose to make, which seems a smart way to think about it, and has arguably always been one of Apple’s strengths.
via The Verge
I linked to reviews of Android Wear 2.0 and the LG watches that launched at the same time a few weeks ago, and those were pretty negative. Now, here we have another entry from a major Android vendor and it seems to be at least as bad as LG’s. At this point, it feels like some Android vendors have given up on the platform entirely, while others seem to have given up trying to make a smartwatch competitive with the Apple Watch but are still putting what they do have out into the market. None of this is going to help Android Wear or smartwatches in general. I’ve said before that I think it will take a Pixel-style first party entry from Google to give this platform the boost it needs, because for now Android Wear continues to be more or less irrelevant in the smartwatch and broader wearable market. Even if Google does get into this market directly, however, it continues to be far smaller and narrower than many people originally thought, and it’s currently dominated by Apple.
via Android Central
Apple Watch Series 2 Satisfaction & Usage Survey – Wristly (Mar 13, 2017)
Wristly is one of the only organizations out there which does regular Apple Watch user surveys, and as such provides some very useful insights into how users feel about their Watches and how they use them. It’s worth reading the whole thing, but I’ll call out two points in particular: user satisfaction has risen over the past year as the number of users has grown significantly, and the drivers are the new hardware and new software Apple has released in the past year. That both have driven increased satisfaction is obviously good for Apple, but the fact that the new software improved the experience has possibly also worked against bigger hardware sales – I know my first generation Watch performs well enough running the new software that I don’t feel the need to run out and buy a Series 2 device, and I’m guessing the same is true for others. But of course the Watch has sold reasonably well regardless, and so the user base continues to expand, albeit still at a fairly small scale relative to massive mainstream categories like smartphones.
Given all the focus Fitbit has been putting into smartwatches lately, it’s good to see the company get back to focusing on its core value proposition: really good dedicated fitness trackers. The acquisitions it’s made and products it’s launched have made me worried that, rather than sticking to its core market, it’s trying to expand into territory dominated by Apple and to a lesser extent Samsung, which seems unwise. The Alta will now get a version that costs $20 more for an embedded heart rate monitor, and which also promises to track sleep better. This is good incremental innovation from Fitbit, which seems to have managed to squeeze the new functions into the same size, and it should also give average selling prices a bit of a boost. ASPs have risen over the last several years, but remain under $100 most quarters, and have been boosted most in those quarters when new high end devices launched. Given Fitbit’s bad Q4, it needs lots more of this kind of thing to spur repeat purchases and broaden its addressable market, though the overall ceiling on this market continues to be one of its biggest long term challenges.
via Ars Technica
Wearables grew 16.9% in Q4 2016, Fitbit still first but Xiaomi is gaining – VentureBeat (Mar 2, 2017)
The numbers here look about right, but what a far cry from the forecasts of the wearables market we saw a few years back. I recently wrote a piece on the state of the wearables market, in which I argued there are really three important sub-markets within wearables: the Apple Watch in its own category, dedicated fitness trackers (in which Fitbit dominates in western markets and Xiaomi in China), and Samsung’s various devices, many of which are bundled with smartphone purchases and therefore thrive on a rather different business models from the others. These IDC numbers largely back that up with market share numbers, but also reinforce the point I made in that article about how the market has fallen short of its theoretical potential and largely stopped growing. It can still grow, but the offerings need to get much better and broader in their appeal, and to some extent we also need the technology – especially in components – to catch up with the vision here.
Huawei Watch 2 and Watch 2 Classic officially unveiled at MWC 2017 – AndroidAuthority (Feb 27, 2017)
These two watches are somewhat reminiscent of the LG smartwatches that debuted with Android Wear 2.0 a few weeks back – there are again two, with somewhat different form factors, but this time the feature set is more consistent across them, as is the price. That price, though, is fairly steep – in line with the low end of Apple’s Watch price range, which continues to be a tough place to be when your watches look very much like the smartwatches they are rather than nice pieces of smart jewelry. Huawei definitely has the scale to do some interesting things in watches if it chooses to, but I can’t see these new models selling in very large numbers at these prices.
Nokia Making Big Move Into Digital Health, Relaunching Withings As Nokia This Summer – Forbes (Feb 27, 2017)
This is where things are going to get interesting – on the one hand, you now have HMD Global launching Nokia phones, and on the other you have the entirely separate company called Nokia launching its own consumer gadgets under its own brand. So there will be both smartphones and fitness devices in the market carrying the same brand, which have nothing to do with each other. It looks like Nokia is going to kill off the Withings brand it acquired and make a big push into health and fitness. As a non-consumer brand since its sale of the phone business to Microsoft, this is going to be an uphill battle for Nokia, and especially in a crowded and somewhat stagnant wearables market. Withings produced some interesting devices over the last several years, but it’s never had significant market share, and I’m not convinced Nokia will change that. Health (as opposed to pure fitness) is certainly one of the more promising aspects of this broader space, and it looks like Nokia is investing there, with a HIPAA-compliant Patient Care Platform among other elements. That may be its one opportunity to succeed where others have failed.