Smart Watches, Smart Choice

Daniel Todaro, GEKKO’s managing director discusses the growing trend in smart watches, as we all look to monitor our health more closely and the wider acceptance these devices are gaining in the wake of COVID-19

Lockdown turned the attention of many to fitness and general wellbeing to make the most of the limited options available to exercise our bodies and minds. Therefore, what easier way to monitor this than through a Smartwatch, to give us that additional incentive or red flag to get up and be active within the constraints we all encountered. As a result, the market experienced a 20% surge in sales for Smartwatches during the H1 period that included lockdowns across much of the globe. The Wearables market is forecasted to grow in 2020 by 27%, with average selling prices dropping 4.5% but increasing to be a market worth over £18 billion.

It is fair to say that the popularity of smartwatches has been driven by advances in miniaturisation, through smaller and smarter sensors enabling ergonomic product design in devices. In fact, research and advisors, Gartner, are predicting that 10% of all wearables may be discreet and nearly invisible in the near future.

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

You will not have missed that Apple launched the 6th incarnation of its watch, which over its product lifecycle has contributed considerably to the smartwatch market. Indeed, Apple holds the largest share of a category that shipped a staggering 92.4 million units in 2019. Fast-forward to Q1 2020 and the increased popularity in the Apple Watch saw 4.5 million units shipped, holding a 26.8% share of the market. Whilst not to undermine this impressive lion share of the market that Apple holds, it’s important to note that there are other equally as good, if not better, wearable brands and devices available on the market. In total, all brands contributed to global sales across the category and in some instances shipping more than Apple when you include all Fitness wearables from Trackers, Body Sensors and Smart Wristbands.

The other significant market leaders in the smartwatch category are Fitbit, who shipped 2.5 million units in the q2 2020, as well as Samsung who held a 10.8% share in the first quarter of 2020. Other more sports focused brands, such as Garmin, extend the Smart watch category towards the pro athlete types that would never consider any mainstream or ‘lifestyle’ brand. Also, let’s not forget the many ‘challenger’ brands that are impacting on the market and chipping away at the category leaders share. These include the Chinese company Xiaomi, whose Mi Band fitness tracker has been witnessing great success creating a market share of 20.4% in Q2 2020. Put all these brands together and the category is forecasted to grow having already successfully shipped across all brands 33.7 million devices in Q2 2020.

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

The integration of smartwatches into our lifestyles has become ‘normal’ to many across all generations who now couldn’t live without these devices. This growth in popularity and acceptance across all demographics and wider markets will see the category grow further and ship a forecasted 156 million units in 2021, an increase of 14.4%.

This increase will certainly see the smartwatch landscape potentially change with shifts in operating systems as Google’s planned acquisition of Fitbit enables it to bolster its health and fitness offerings. As you can imagine, an aggressive acquisition strategy is likely to be on the cards adding more OEM manufacturers to its list of Google Wear OS providers. The competition will undoubtedly get fierce with Samsung’s Tizen also looking to gain share with its own fitness-focused Galaxy watches. Therefore, the need to innovate and compete against challenger brands becomes even greater and adoption will be greater if the integration and compatibility of your smartwatch fits in seamlessly with your other devices.

Fitbit, who you could argue created the category, has recently launched the Sense product that responds to the growing desire from consumers to better understand their lifestyle and increase wellbeing. Features include Stress Management, Compatible ECG App, Skin Temperature Sensor and Sleep Tools for Better ZZZs. All bundled up in a competitively priced and design-led product that is compatible with all iOS and Android devices and can be customised to mix and match with colours and accessories to broaden, not only compatibility, but also its appeal.

Pre-empting this battle is perhaps the reason why Apple has launched the lower priced Watch SE that sits between its premium and entry-level legacy devices. This will enable the brand to benefit from the growth, to be stimulated through an aggressive land grab dominated by Google, Fitbit, Samsung and challenger brands such as Xiami and Huawei. It is widely recognised that the market for basic smartwatches and bands will benefit from the youth market whom these challenger brands offer a cost effective entry into the category and perhaps also those late adopters to the category.

With the gifting season upon us, against the backdrop of Covid-19 and people not being able or perhaps opting not to go to gyms, the options for smart health to increase its reach are obvious. Extending this to the older generation who perhaps value the peace of mind of understanding vital statistics without the need to book appointments and venture into surgeries may increase forecasted growth.

What we do know, it is the established users who remain an important sector, as they demand that their smartwatch does more and we are less coy about wearing these daily in place of a traditional timepiece. In fact, according to market research from Kantar, British consumers are not shy in admitting they use a fitness tracker, with 15% happy to claim publically to owning a smartwatch. Adopting them as a lifestyle choice to be used more widely across families and friends, thus increasing acceptance and contributing to the wearables success story.

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