Is It Time for the Smartwatch Market Explosion?

As competition grows in the smartwatch market, will one true leader emerge?

Is it time to start wearing a watch again? A number of vendors are assuming consumers will say yes, as new smartwatches are hitting the market this year by vendors such as Apple, LG, Motorola, Pebble, and Samsung. We asked Angela McIntyre, research director at Gartner, to discuss what the main drivers of consumer mass-market adoption of smartwatches will be and how the market will play out in 2015.

Q: What impact has the Apple Watch had on the smartwatch market?
A: It’s legitimized the smartwatch industry. There has been much discussion and hype around the market, but there has not been mass adoption. With the launch of the Apple Watch, this is beginning to change. Apple is a strong lifestyle brand that people expect to set new trends. It will only take a small percentage of the millions of people who purchased an iPhone to purchase an Apple Watch this year for its sales to exceed the sales of ALL smartwatches last year.

Q: What do vendors in the market need to do to stay competitive?
A: Brand and channel to consumers are key. Other consumer electronics companies with highly respected brands find it difficult to gain traction in smartwatches because consumers do not identify their brand with fashion. Traditional watch manufacturers have advantages over consumer electronics companies because people trust established watch brands to deliver quality and to determine style trends for watches. Watch brands, such as Fossil, Guess, Swatch and TAG Heuer, have announced smartwatches to extend their existing product lines and to attract new types of buyers, for example younger people who are not used to wearing watches.

Consumer electronics companies and components suppliers should partner with traditional watch manufacturers to leverage their brands and retail channels. Most consumer electronics companies sell their smartwatches at electronics stores and at mass merchandisers where people may go to purchase a utilitarian watch. Consumer electronics companies typically don’t have relationships with high-end retailers. However, established watch brands can sell at fashionable department stores, jewelers and boutiques where people tend to shop for higher priced watches.

Q: Are smartwatches a fad or here to stay?
A: Smartwatches are here for the long term. As with most consumer electronics, new technology increases the capabilities of products over time. Bluetooth technology provides connectivity that has started to be designed into watches. An example is Casio and its G-Shock line of watches. Some of these watches now come with Bluetooth technology.

Q: Is there that one “killer” app that will push smartwatches into mass adoption?
A: People ask if there is a “killer app” for smart watches, the one use case that will drive mainstream consumers to buy a smartwatch. There is a “killer app” of sorts, it is convenience. Convenience mainly from being able to leave your phone in your bag, pocket or at home. Smartphone users can check their phones a hundred times a day or more. Missing a call, a text, or a friend’s social media posting can make a person feel anxious. Even with the freedom of not carrying a phone around, consumers with smartwatches will know when they are being contacted and can answer if they choose – in some cases via the smartwatch.

Smartwatches put people in control of their communications instead of letting the smartphone be in control of them. Smartwatches have the potential to keep us connected, but in a more convenient way. It is about lifestyle – living in the moment more and reducing distractions from the phone.

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