‘Internet-enabled watches are a publicity gimmick’ – this is how a popular International tech website summed up the emergence of wearable tech in 2001. Years later many still believe that this holds true.
When the Apple Watch arrived, it clocked over a million units in sales and yet the tipping point for the smartwatch category hasn’t quite arrived. Being predicted for 2014, Industry numbers were clear evidence that 2014 was a disappointment and now despite all the brouhaha and hype, 2015 doesn’t quite look like the year of the smartwatch.
In the beginning:
Contrary to popular opinion, the idea of a smartwatch is not a twenty-tens phenomenon. No, we are not talking about Dick Tracy’s watch but devices like the IBM Watch Pad. It actually ran an open source (Linux version 2.4) operating system with a QVGA (320 x 340 pixel) LCD screen, Bluetooth and accelerometer. The dampener? – Terrible battery life. Things have not changed much since 2001 when the WatchPad and the joystick-enabled Matsucom onHand PC (with a few basic applications like a calendar, expense keeper and a few games) were just blimps on the radar. There were more such flashes of brilliance in the aughts – the Microsoft Spot, Fossil’s Wrist PDA, but nothing that shook up the market.
The race begins:
Things started hotting up from 2012 that was the year when the Pebble smartwatch was seeking $100,000 through Kickstarter. It raised over $10 million and hit the market in 2013. By end-2014 the company managed to sell 1 million Pebbles and has just released Pebble Time. Samsung (Galaxy Gear) and Sony unveiled their smartwatches and it prompted research firm Current Analytics to suggest that 2013 will be the year of the Smartwatch. However it wasn’t to be. In June 2014 Google uncovered the Google Wear platform at the Google I/O. The Samsung Gear Live, LG’s G Watch and the slinky Moto 360 all sported this new avatar of Android. By end 2014 Samsung launched the much vaunted Gear S with its own home-grown Tizen OS. Opinions were divided – some users liked how the watch hugged the contours of their wrists while others felt that the 2-inch screen was ridiculously large. The device came with its own SIM card Slot sparking the big debate that some device manufacturers are still grappling with – is the smartwatch a replacement device or a complementary device that pairs up with your smartphone ?
Apple takes the plunge:
Apple has clearly taken the complementary device route with the first Apple Watch and not surprisingly the average spend on an Apple watch was a touch above $500-way above how much consumers spent (on average) on smartwatches in 2014. The April 2015 debut of the Apple watch might have been a blockbuster by smartwatch standards but not all analysts are impressed. Slice Intelligence estimated that 957,000 people in the US alone pre-ordered the Apple watch, quite a few of them ordering more than one watch (1.3 watches per consumer). While the price band straddled 38 variants between $349 and $12,000 for the 18-Karat gold edition, according to KGI securities almost 85% of the pre-orders were for the base (Apple Watch Sport) version priced at $349.
The numbers are not quite adding up:
In late 2014 Morgan Stanley estimated that the Apple watch would cross 30 million in sales in its first year. That number has been scaled down by Bank of America's Merrill Lynch to 9 million units. It’s still significantly more than the 1 million plus units that Android Wear clocked in 2014, Pebble took more than a year to touch the 1 million mark despite being platform neutral (Accessible to both iPhone and Android users). Slice Intelligence reported that Apple watch sales numbers are down significantly from 35,000/day to 2500/day by July 1 suggesting that the initial frenzy had died down. Apple didn’t respond to that report.
Indian customers are clearly choosing a wait and watch approach. While none of the companies wanted to officially comment on the trends and were unwilling to share sales figures, it’s clear that aside from a small percentage of geeks and ‘influencers’ most Indian customers are treading cautiously. Battery life was clearly one concern, while many consumers we spoke to believe that the category is still ‘Work in progress’. It doesn’t help that the Apple Watch is currently unavailable in India. ASUS that launched one of the better looking Android Wear watches in end-2014 – The ZenWatch, chose to skip India. Most analysts believe that smartwatches have not built a strong value proposition; we agree. With just 6 months to go, it doesn’t quite look like 2015 will be the year of the smartwatch as many of us believed it would be a year ago. But the improving user experience, slight improvements in the battery life and steadily improving sales numbers suggest that it’s too early to write this category off. Maybe the smartwatch will finally keep its date in 2016. We are keeping our fingers crossed too.
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