Smart watches

Smart watches, smart choice – PCR

Daniel Todaro, Managing Director of GEKKO, discusses the growing trend of smartwatches, as we all seek to monitor our health more closely and the wider acceptance of these devices in the wake of COVID-19

The lockdown has focused the attention of many on fitness and general well-being to make the most of the limited options available to exercise our body and mind. So what easier way to monitor this than through a smartwatch, to give us that extra incentive or that red flag to get up and be active within the stresses we’ve all encountered. As a result, the market saw a 20% increase in smartwatch sales in the first half, which included shutdowns across much of the world. The wearables market is expected to grow by 27% in 2020, with average retail prices down 4.5% but growing to become a market worth over £18bn.

It’s fair to say that the popularity of smartwatches has been boosted by advances in miniaturization, thanks to smaller, smarter sensors enabling ergonomic product design in devices. In fact, research and advisors, Gartner, predict that 10% of all wearables could be discreet and nearly invisible in the near future.

Beyond hardware, the trend is for the development of apps and services to complement wearable devices. Apple’s recent announcement of Fitness+, Amazon’s new Halo, and Fitbit’s Fitbit Premium connects users with health and fitness content offering consumers guided workouts, coaching and diet tips, everything incorporating data from their portable device. For many, this creates greater advocacy for a brand’s ecosystem, making software equal to hardware when consumers make a choice on which wearable is right for them.

You will not have missed that Apple has launched the 6th incarnation of its watch, which over its life cycle has contributed significantly to the smartwatch market. Indeed, Apple holds the largest share of a category that shipped 92.4 million units in 2019. Fast forward to the first quarter of 2020 and the growing popularity of the Apple Watch saw 4.5 million shipments. ‘units shipped, holding a market share of 26.8%. Without wishing to undermine this impressive market share held by Apple, it is important to note that there are other brands and equally good, if not better, portable devices available in the market. In total, all brands contributed to the category’s global sales and in some cases out-ship Apple when you include all wearables from fitness trackers, body sensors and smart bands.

Other significant market leaders in the smartwatch category are Fitbit, which shipped 2.5 million units in Q2 2020, as well as Samsung which held a 10.8% share in Q1 2020. Other brands more Sports-focused brands like Garmin are expanding the smartwatch category to the types of professional athletes who would never consider a mainstream or “lifestyle” brand. Let’s also not forget the many “challenger” brands that are impacting the market and eating away at category leaders. These include the Chinese company Xiaomi, whose fitness tracker Mi Band enjoyed great success by creating a market share of 20.4% in the second quarter of 2020. Put all these brands together and the category should grow after having already successfully shipped 33.7 million devices across all brands. in Q2 2020.

The value of this market grew 34% year-over-year as more consumers adopt smart devices for health and leisure reasons.

The integration of connected watches into our lifestyles has become “normal” for many generations, all generations combined, who could no longer live without these devices. This growth in popularity and acceptance across all demographics and in broader markets will see the category grow further and ship around 156 million units in 2021, an increase of 14.4%.

This increase will certainly see the smartwatch landscape potentially change with changes in operating systems, as Google’s planned acquisition of Fitbit allows it to bolster its health and fitness offerings. As you can imagine, an aggressive acquisition strategy is likely to be considered by adding more OEMs to its list of Google Wear OS vendors. Competition will no doubt become fierce, with Samsung’s Tizen also looking to gain share with its own fitness-focused Galaxy Watches. Therefore, the need to innovate and compete with competing brands becomes even greater and adoption will be greater if your smartwatch integration and compatibility seamlessly integrates with your other devices.

Fitbit, which could be said to have created the category, recently launched the Sense product which responds to the growing desire of consumers to better understand their lifestyle and increase their well-being. Features include stress management, compatible ECG app, skin temperature sensor, and sleep tools for better ZZZs. All wrapped up in a competitively priced, design-focused product that’s compatible with all iOS and Android devices and can be customized to mix and match with colors and accessories to expand not only compatibility, but also its attraction.

Anticipating this battle may be why Apple launched the low-priced Watch SE that sits between its older high-end and entry-level devices. This will allow the brand to benefit from growth, spurred by an aggressive land grab dominated by Google, Fitbit, Samsung and challenger brands such as Xiami and Huawei. It is widely recognized that the market for basic smartwatches and wristbands will benefit from the youth market for whom these challenger brands offer a profitable entry into the category and perhaps also late adopters of the category.

With giveaway season upon us, in the context of Covid-19 and people unable or choosing not to go to gyms, the options for smart health to increase its reach are obvious. Extending this to the older generation who perhaps appreciates the peace of mind of understanding vital statistics without the need to book appointments and venture into surgeries may increase the expected growth.

What we do know is established users who remain an important sector, as they demand their smartwatch to do more and we are less shy about wearing them every day in place of a traditional watch. In fact, according to market research from Kantar, UK consumers are quick to admit they use a fitness tracker, with 15% happy to publicly say they own a smartwatch. Adopt them as a lifestyle choice to be used more widely among families and friends, increasing acceptance and contributing to the success of wearables.

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