Oh, occasionally I’ll check emails or messages on it, especially if I’m in a meeting or a situation where it’s not feasible to open up my phone. But I’m not using the health apps, for example, or making Apple Pay transactions. It’s basically something that I bought as an Apple fanboy because I like the look of it.
But given my questioner was thinking about making a similar purchase, it did bring the smart watch market back to front of mind. It’s clearly a booming digital sector. Late last year, Gartner did one of its ‘think of a number’ projections and declared that this year 74 million smartwatches will be sold, making them the number one form factor for wearable devices, rising to 115 million by 2022.
That’s future thinking, of course. For 2018, according to research by The NPD Group, US smartwatch sales came close to $5 billion in 2018, up a hefty 51% year-on-year, with 16% of adults now owning one. Weston Henderek, Director, Industry Analyst for NPD Connected Intelligence, commented:
Over the last 18 months smartwatch sales gained strong momentum, proving the naysayers, who didn’t think the category could achieve mainstream acceptance, had potentially judged too soon. The ability to be truly connected via built-in LTE without the need to have a smartphone nearby proved to be a tipping point for consumers, as they now recognize the value in being able to complete a wide range of tasks on the device including receiving notifications, messaging, accessing smart home controls, and more.
For the moment, the sector is dominated by 3 players - Apple, Samsung and Fitbit, which between them control 81% of the market. But traditional watch makers, such as Fossil, are gaining ground, while Google has yet to make its move - Pixel Watch anyone? (Maybe sooner than you think...)
Fossil estimates that the addressable market for traditional watches is around 35 billion users, but for its part, sales of such devices are in decline. On the other hand, smartwatches are on the ascendency.
That’s mirrored at Apple where the company pitches the line that its Wearables business - which includes AirPods as well as the Apple Watch - is fast approaching the size of a Fortune 200 company in its own right. In its most recent earnings conference call, Apple CEO Tim Cook said:
We had our best quarter ever for Wearables Home and Accessories with 33% growth in total and almost 50% growth from Wearables, thanks to strong sales of both Apple Watch and AirPods…We have an amazingly talented team creating hardware, software and services, optimizing each of them to create an unparalleled user experience.
Apple Watch is a powerful example of that. It's humbling to read e-mails from customers around the world telling us how Apple Watch has dramatically changed their lives by motivating them to be more fit and active, by alerting them to potentially serious health conditions such as AFib and by helping them in times of crisis with features like fall detection and emergency SOS.
Fitbit CEO James Park was making much the same case late last year when he said:
Fourteen months ago, we had zero share of the smartwatch category, and today we're the number two player in the US, which is a significant achievement and something I'm very proud of….Despite smartwatches being a more competitive segment of the wearable market, we have demonstrated that we can quickly and effectively gain market share. This underscores the power of our brand and our ability to deliver devices consumers love.
But the traditional watch brands aren’t about to give up. Fossil CEO Kosta Kartsotis says the firm has some clear priorities when it comes to responding to the smartwatch revolution:
In wearables, our objective remains to bring fashion, branding and style to this business with new products tailored to each of our brands unique point of view. This past year, we added heart rate, enhanced fitness and Google Pay to our smartwatch offerings. We have great technology partners in Google, Qualcomm and Citizen and an outstanding platform of brands to continue to create excitement and growth in our connected business.
It’s a period of transition for the ‘old style’ watch manufacturers, acknowledges Fossil’s Chief Strategy and Digital Officer Greg McKelvey:
The traditional watch has been tough for some time and we don't have a lot of visibility on the turnaround in there. I would say this year we've identified a number of opportunities, but especially for the balance of this year we have seen a response to some new trends we've put in the marketplace and our teams are working diligently on as much differentiation as possible.
We do think at some point that a game changer for traditional watches is going to be adding technology and part of our arrangement with Citizen is basically to do that is to get to critical mass and scale. I have great product and lower prices which will create more awareness to do that as quickly as possible…We do think through a lot of innovation and differentiation some of it being technology we'll be able to reach a point where we start growing again.
One interesting recent development has been the signing of a deal with Google to sell “smartwatch technology currently under development” in a deal worth $40 million. Google will also acquire a “portion” of Fossil’s research and development team currently working on the wearable tech.
What does that suggest? According to Google Vice President of Product Management Stacey Burr:
The addition of Fossil Group’s technology and team to Google demonstrates our commitment to the wearables industry.
But throw into the mix a recent job ad for a VP of Hardware Engineering for Wearables and one for the role of Manager, Design – Wearables and the conspiracy theorists among us might suspect that, despite previous denials by Google, a push towards a Pixel Watch is far from being outside the realms of credibility.
Whether the end result of this is a watch or a fitness tracker or both, if Google can product a product at a more ‘commodity friendly’ price than the Apple Watch, the market could soon find itself with another major force to be reckoned with.
What I want from my Apple Watch before I really engage with all its functionality is the ability to make video calls on it, as well as to break free of it being tethered to my phone. My carrier doesn’t allow me to do the latter at the moment and the watch isn’t a significant enough change enabler to make it worth the effort of shifting. So for now, it’s a pretty thing on my wrist and it tells me the time. I’ve kept it longer than I did my Fitbit, long since consigned to a desk drawer somewhere.
What is going to be most interesting about this space in the coming year or so, regardless of what ambitions lurk in the Google labs, is how the likes of Fossil react. In an ideal world, a super-connected wearable with the style of an old-fashioned precision instrument would win me over.