Growth of the smartwatch industry

The growth of the smartwatch industry has been slow. Can Android Wear 2.0 and the entrance of luxury watchmakers into the segment change things?

It’s amazing how quickly the landscape of the technology world changes. It wasn’t too long ago when smart wearables were hogging all the limelight and were dubbed ‘the next big thing’. Now, the hype has dramatically fizzled out. Major technology companies across the globe poured millions of dollars into research to make ‘the’ game-changing product, but quickly learned that getting wearables right is a tall order. In addition to the form factor and the aesthetics, to build smart wearables that are truly useful and desirable for people, has been a bigger challenge than these companies expected. 2016 was one of the worst years for smart wearable tech, which brought more bad news than good. Last year, a report released by IDC, the global market intelligence firm, pointed out that total smartwatch volume shipped in Q3 2016 was 2.7 million units, a sharp decrease of 51.6% from the 5.6 million units shipped in Q3 2015. Although IDC offered several explanations on the year-over-year decline in shipment volumes, it goes on to show the growing pains of the smartwatch market.

Back to the future

However, this year has seen new life breathed into the segment. Lots of new technology is being introduced; quite a few companies are making their foray into the market, and notable luxury watchmakers are becoming more open to the technology. Which makes us question – will smart wearables, at this interesting yet crucial juncture, see a revival?

To answer that question, let’s take a look at the latest in the segment. And the most important news came in the form of the official launch of Android Wear 2.0, which was announced last year at Google I/O. It is the biggest update to Google’s wearable operating system since its launch in 2014 — something that all Wear aficionados have been patiently waiting for. Wear 2.0 has brought in solid improvements over the previous OS and feels all grown up now, with added functionality like the ability to download certain apps directly to Wear 2.0 watches over a WiFi or LTE connection.

But, the biggest limiting factor for an OS is the vessel it arrives on, the hardware. Interestingly, a slew of new smartwatches with Android Wear 2.0 have been introduced in the last few weeks. And what’s more interesting is that a big chunk of them are all high-end, luxury watches. This year’s Baselworld show was flooded with opulent smart timepieces. Now, quite a few luxury watchmakers are making an effort to bridge the gap between traditional timekeeping and smart wearable technology. TAG Heuer has launched its new generation of Connected watches, which come with an all-new design philosophy. The new TAG Heuer Connected Modular 45 watch has customisable lugs and a modular design which lets you switch between a smartwatch and a more traditional automatic movement. Montblanc finally made its debut in the smart wearables segment by launching the Summit smartwatch. Both the timepieces run on Android Wear 2.0.

It’s not just TAG Heuer and Montblanc, but a host of other brands that introduced new smartwatches running Wear 2.0 at the event. Companies like Hugo Boss, Tommy Hilfiger, Guess and Movado, have all come up with new Android Wear-powered smartwatches. One exception is Swatch, which is developing its own ‘Swiss’ OS. The company recently announced that Tissot will launch the first watch powered by the new OS in 2018. It’s a major gamble for Swatch, because we have seen other brands struggling with this route.

Access control

Coming to the more affordable aspect of the smartwatch market, Samsung’s new Gear S3 rivals the Apple Watch with great hardware, excellent battery life, a host of new features and a very attractive design. However, Samsung’s OS for its wearables, Tizen, has always been its Achilles heel. Tizen’s sub-par app support when compared to Apple and Google’s offerings is its biggest let down. A smaller app library has also been a major limiting factor for watches that run on native or custom OS. Chinese tech company Mobvoi’s Ticwatch, which runs on a custom Android OS, is one such example. Nevertheless, they managed to survive and gain traction, thanks to the product’s affordability. The curious case of Fitbit is one of the most interesting stories in the wearables segment. The brand’s meteoric rise and subsequent loss of popularity in the last two years is simply staggering. It will be interesting to see if it can successfully diversify from making fitness trackers to capture the smart wearables market with its soon-to-be-launched smartwatch, and if the decision to acquire Pebble and high-end smartwatch maker Vector will pay off or not.

Pebble arguably kicked off the smartwatch category with its original Kickstarter campaign in 2012. The company went on to release quite a few variants of the Pebble Watch, but none of them achieved mass success. Pebble saw a massive drop of 54.1% in their year-on-year growth for 2016, before being consumed by Fitbit. There has been only one player which has consistently performed in the segment and it’s Apple. However, even the Cupertino-based tech giant has been struggling to induce growth in their Apple Watch line. The future of smart wearables is shrouded in uncertainty, but at least for now, it has received a much-needed shot in the arm.

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