Rise of the Smartwatch Market: The New Best Sellers in Wearables and Watch industries

The smartwatch market has grown at a triple digit rate between 2013 and 2015

Since 2010 or thereabouts, Apple and Google were widely anticipated (and rumoured) to be in the race to introduce a smartwatch. However, the early leaders in this field were wearable tech start-ups. 

The smartwatch industry registered 3 million unit sales in 2013 when Samsung and Pebble introduced the first generation of smartwatches which paired up with Android and iOS smartphones.

Pebble, the most  successful Kickstarter funded project of its time, in particular, is credited with making the smartwatch popular, pioneering design features such as e-paper display and app support (which have grown to over a 1000). 

In 2013 and 2014 smartwatches were a niche wearable/smart phone accessory segment dominated by Samsung, Pebble and wearable and outdoor sports watch makers. The first wave of smartwatch product lines grew when Google introduced the Android Wear platform for smartwatches and wearables in 2014.  Even as the top ten players changed in 2013 and 2014 as companies entered and exited, the entry of Apple, as was anticipated, overshadows all others.  

At the start of 2016, Apple and Samsung account for 8 out of 10 every 10 smartwatches that are sold.

Apple Watch has a 63% market share of the smartwatch just months after launch in April 2015, toppling Samsung who now have a 16% share. Android Wear smartwatches accounted for 10% of the total smartwatches shipped in 2015.

At the time of writing, Apple has also overtaken Swatch as the highest seller of watches in Q3 2015. 

But consumers continue to favour other smartwatch brands and wrist wearables as well.

With the smartwatch market predicted to grow at 28-30% CAGR and reach USD 60-88 billion by 2020 (based on predictions from IDC, Gartner and Smartwatch group), consumers will have an array of choices and competitive prices offered for smartwatches. 

Smartwatch Marketplace Roundup

The smartwatch market competitors market  can be broken down into three categories based on their offering in this space and core product line.

Market Leaders: Mobile Devices and Smartwatch OEM

This is the space dominated by tech giants Apple, Samsung, Huawei, LG, Lenovo/Motorola, HTC and Google, the last through the Android Wear OS. In the foreseeable future, the smartwatch space will be dominated by the mobile leaders who already have a sizable share of the marketplace and the major use case for smartwatch remains as a smartphone accessory. 

Apple Watch

'The Watch Reimagined' is a tagline for Apple Watch. With features such as Digital Crown, Digital Touch and Force Touch, Apple Watch is the market leader with 63% market share.

Re-imaging the watch and nothing less has been at the heart of Apple’s approach to smartwatches. 

Apple’s strategy of perfecting and intersecting launch with consumer readiness has paid early rewards. Many years in the making, Apple Watch was launched in 2015. It seems to have also helped that the hype surrounding the Apple Watch and the evolving versions of other smartwatches, meant consumers postponed buying decisions until Apple came on the scene. 

Apple Watch combines design aesthetics and a full range of smartwatch capabilities that mirror smartphones and fitness wearable capabilities that match activity trackers and heart rate monitors. Apple has introduced multiple designs from sports watch to a gold luxury edition, marketing the “it’s a watch first” approach followed by the conventional watch industry.

Apple Watch in its first release includes patented innovative features such as Digital Touch, Digital Crown, Force Touch and Taptic Engine, designed for a differentiated user experience. Digital Touch allows Apple Watch users to communicate messages between their watches. Digital Crown is a substitute for mechanical crown of conventional watches, allowing users to return to home screen and scroll display. Force Touch emulates a right mouse click function bringing up additional app controls such as music and calendar, with a slight pressure on the watchface. Taptic Engine is a linear actuator within the watch that notifies wearer with a tap (not a slap) on the wrist.

Apple’s the developer toolkit, WatchKit, was released in 2014 ushering in a wide selection of apps designed for the Apple Watch with its launch. 

Apple is serious about continuing consumer mobile and wearables domination with their technologies, filing numerous patents relating to the watch alone. Apple Watch 2 is anticipated to arrive in March 2016 and have improved communication capabilities, watch faces and other enhancements.

Samsung

Samsung has been an early entrant releasing seven different versions in the Gear family since 2013. The latest version, Gear S2 includes the innovative rotating bezel.

Samsung adopted a strategy of evolution with the marketplace and was an early entrant with the first generation of Galaxy Gear line of watches introduced in 2013 on Android OS. Samsung has continued to introduced new lines and improvements with seven successive generations of the Gear Line introduced on Android Wear and Tizen OS.

Samsung’s successive watch lines have focused on different segments of the wearable and conventional watch markets. Samsung’s Gear Live launched in 2014 built on Android Wear introduced the curved AMOLED display to the smartwatch line and included a built in heart rate monitor and sensor. The latest product on the market the Samsung Gear S2 competes with Apple Watch on design and functions. Built on Tizen OS and featuring the rotating bezel, and in-built health sensors. Gear S2 also provides 3G and 4G connectivity with a SIM card slot for use as a standalone smartphone. The Gear family works with Android and iOS phones and S2 iOS compatibility is expected to roll out in 2016.

Samsung aims to remain a serious competitor to Apple on design, with the rotating bezel feature for menu inputs introduced in the Gear S family in 2015, being widely acknowledged in reviews as an innovative feature and a strong differentiator for the Gear line. Like Apple, Samsung has patented the rotating bezel feature as a smart ring technology. 

Google Android Wear

Google is in the smartwatch space as an OEM. Android Wear powers 10% of the smartwatches sold by consumer technology companies and luxury watch brands. Above: LG Urbance, Moto 360 and TAGHeuer Connected smartwatches running on Android Wear.

Google’s leads the smartwatch marketplace as an OEM. Google’s Android Wear platform is a version of Android OS designed for smartwatches and other wearables inclusive of a developer API. Android Wear enables smartwatch hardware makers with a full range of smartwatch capabilities and support for Android and iOS smartphones. Android Wear powers tech brand watches made by LG, Motorola, Huwei, HTC and ASUS brands and the conventional brand watches made by Swatch, Tag Heuer and Fossil, accounting for an estimated 10% market share in 2015.

Google’s Andriod Wear, like Android, enables users to get accustomed to a familiar interface across different brands. The platform includes the notification functions, Google Now cards and voice command features embedded as well as fitness tracking app Google Fit and integration with Google Play Store. 

Android Wear watch owners have an wide array of apps to choose from Google Play store. Incidentally, watch faces are the most popular app on the platform with free and paid versions provided by developers.

Watchfaces are among the most popular apps for Android Wear smartwatches.

Wearable Tech

FitBit Blaze Smart Fitness Watch, Garmin's vivoactive and Microsoft Band are examples of fitness wearables that also provide smartwatch capabilities.

Early day smartwatches were a wearable accessory which allowed wireless notifications from a smartphone. Pebble is the leading example of a smartwatch core product line which initially paired with iOS and Andriod phone but now runs on its own operating system PebbleOS. 

Pebble smartwatches, the first true smartwatch in the market that was designed for Android and iOS. 

With smartwatch operating platforms supporting fitness sensors as well, smartwatches product lines can easily provide fitness app support. Players in the (wrist) wearable space have responded by introducing their line of smart watches to complement or integrate into their existing product lines.

The strategy followed by leaders in activity and health wearables which dominated the wearables market till 2014 is to retain their core product functions and design while integrating basic smartwatch functions such as notifications and clock face designs. FitBit blaze branded as a smart fitness watch is an example of an activity tracker at heart but which also provides smartwatch functions such as watch faces for all day use and notifications, as well as support for Android, iOS and Windows.

Similarly, Garmin, the leader in outdoor, mapping and sport wearables have introduced their range of smartwatches, vivoactive which are retain their core sports activity and GPS tracker functions while adding smartwatch design and notification functions.  

Conventional Watch Makers

Conventional watch brands such as Fossil Q (left), Vector (center) and Seiko have taken different approaches in their smartwatch product lines, without radically altering watch design features.

The conventional watch industry which is largely driven by luxury brands, sport watches, commodity digital watches and gift economy, have responded to the threat of smartwatches by launching or announcing plans for their own branded product lines.  The watch industry has opted for retaining the design of traditional watches with common smartwatch functions or creating a complimentary smartwatch line. 

Product lines are based on Android Wear or custom software, the latter not a watch OS but embedded software that is compatible with smartphones. Vector and Titan Juxt are examples of this category. Luxury brands such as Tag Heuer’s Connected smartwatch powered by Android Wear have retained the premium pricing of their conventional product line, without compromising the design and reliability features for which they are known.

Brands such as Seiko and Casio had taken an initial position of not building a high level of digital technology into their watches which duplicate smartphone functions, requires building new technology capability and including battery recharging, a feature that may not resonate well with the dominant watch industry user base - people who prefer watches for timekeeping or as a luxury accessory. Leading digital watch maker Casio has since announced plans for a smartwatch in 2015.

The strategy for conventional watch makers is to not cede market share, at least of brand loyals. This strategy may ultimately dilute the positioning of conventional watch industry in the smartwatch space.