A recent report from IDC, a market intelligence firm, revealed stagnation in the smartwatch market. It is unsurprising that consumers are averse to buying a $400 watch that connects to their $800 phone with little added advantage beyond convenience. Even the FitBit, a smartwatch that tracks your health, is chugging along slowly.
Part of the problem is that smartwatch tech doesn’t solve a problem; it’s just a shiny new gadget.Show and Tell
According to the report, smartwatch shipments fell by 51.6% year-on-year for the third quarter of 2016. Although Apple is enjoying a leading 41.3% market share, the figures reveal that the Apple Watch sales have dropped by a troublesome 71.6%. This can be explained in a few ways.
One explanation is that people were waiting for a second release, which skews the figures. In other words, those potential buyers already purchased and wouldn’t repurchase the same item so they are just waiting for next generation. This is the optimistic perspective: the inconvenient truth is that the latest version failed to excite.
The simplest and perhaps more accurate explanation is this: a user cannot justify spending $400 on a smartwatch. Apple’s newest version is waterproof with quicker processing time, but that does little to convince someone about the price point.
There is also the growing concern of technology for technology’s sake. What problems do smartwatches solve? Clearly we have few qualms about our smart phones. I still see people face-deep in them just about everywhere. Aside from the sociological and safety concerns of smart phone ubiquity that pundits reflexively discuss, I don’t think consumers take much issue.
Every Action Has an Equal and Opposite Reaction
To add some drama to the mix, rumor is that traditional watchmakers are plotting a reprisal. Well-known brands such as Fossil are offering smart-analog watches, putting a modern twist on a classic item. Tech giants beware! Incumbents can tap into a well-established market and entice the more tech-minded with a lower price point.
Garmin posted the largest year-over-year increase among top vendors. Although they only hold around 20% of the market, the increase demonstrates the future of smartwatches may be in a different direction.
Speculators will carefully watch sales figures over the holidays to evaluate whether the recent decrease in smartwatch sales is a blip or a worrisome trend.
In Sum
Smartwatches are not a necessary technology because they do not solve a problem. This makes justifying the expenditure difficult. Concurrently, it puts traditional watchmakers in a position to win, given their legacy customer-base that ostensibly isn’t unhappy with the classic product. There is room to build on the classic and long-standing technology with great success.
In my opinion, this is a slap on the wrist to technology titans who think consumers will reactively jump on anything new just because it’s new. It also highlights latent consumer standards. Even if the standard is that redundant technology should be inexpensive. At the very least, this curbs the vice of technology for technology’s sakes.
Will the average consumer continue to struggle to justify the price and the purpose of the smartwatch? Or will the holidays transform the market?
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