Why are OEMs trying to force the smartwatch revolution?

Technology companies work hard to bring us a better future. They lie awake at night worrying about how they can make our lives easier, how they can provide us with the next killer gadget to boost our productivity, and put a smile of wonderment on our faces.

Oh no wait…. no that’s wrong. Technology companies work hard to make money. They lie awake at night worrying about how to part us from our hard-earned cash, how to sell us more gadgets, and put a profit-generated smile on their faces.

Smartwatches are the next big thing

Everyone and their dog is making a smartwatch right now. The analysts are falling over themselves to predict a surge in sales.

• IDC suggests wearables will sell more than 19 million units this year, rising to 112.9 million by 2018.
• Gartner reckons that 40 percent of wrist-worn devices will be smartwatches by 2016 (to put that in perspective the traditional wrist watch market was 1.2 billion last year, so nearly 500 million smarwatches within two years).
• NextMarket Insights suggests that 15 million smartwatches will ship this year and that will grow to 373 million by 2020.
• Canalys reports that shipments of wearable bands (which it divides into basic and smart) are up 684 percent in the first half of 2014.

Do you know how many smartwatches shipped in 2013? Strategy Analytics says 1.9 million and many of them were bundled with a smartphone by Samsung. The first half of this year has seen shipments of 1.7 million.

It is early days, but we’re not seeing a great deal of evidence that this is the wearable technology everyone has been waiting for. We’ve certainly moved on from the days of Seiko’s wrist computers back in the 80’s. Current releases eclipse Microsoft’s efforts from just a decade ago. But is this really the year of the smartwatch? The demand looks distinctly limp, but there’s a reason for that.

Early adopters as beta testers

The first wave of a new category is almost always pretty bad. There are teething troubles to work out. Manufacturers need feedback to understand what features people really want and there can be a difference between what they think they want and what they actually use. Large scale production brings prices down, research enables smaller and sexier designs, and third-parties develop clever software and accessories that take things in new directions.

We can’t really judge the future smartwatch market based on the current smartwatch market. They are mostly chunky and ugly. Their main purpose is to save you from having to take the smartphone out of your pocket. The more features you cram in the worse the battery life gets. More big OEMs will launch smartwatches in the coming months and they’ll refine their lines. Traditional wrist watch manufacturers will get in on the act and take things in a more stylish direction. Let’s face it there’s plenty of room for improvement.

Why are they pushing smartwatches?

The smartphone market is saturated. It’s coming down to a battle between price and brand. As prices fall and commoditization kicks in OEMs profits are squeezed hard. Smartwatches present two important opportunities:

1. A new product category is a new market to exploit.
2. A smartwatch could also be a differentiator that sells your smartphone over another.

Obviously we don’t need smartwatches. And OEMs can’t make us buy them. Just as they couldn’t make us rush out for new 3D TVs and smartphones. Even with a wave of hype they have to make something desirable for it to really catch on and it remains to be seen whether they’ll pull that trick off with smartwatches or not.

Where’s the USP?

There’s definitely a lack of really compelling killer features for this first crop of smartwatches. There are two basic directions they seem to be taking.

Some are essentially miniaturized smartphones or extensions of your smartphone and it’s not clear that they really offer anything that’s unmissable. If your smartphone is Batman, then they’re Robin, and we can all do without Robin right?

The category that is gaining some traction is fitness trackers. A smartwatch can track your activity more effectively than a smartphone. It is convenient to wear and forget about and you can sync data later to review it. Devices that just include a few activity sensors can run for days and even weeks between charges. They don’t have to be chunky and they don’t have to be so expensive.

If smartwatches could match the battery life and style of some fitness trackers then they’d be taking off a lot faster.

How big will smartwatches be?

If the OEMs can’t sell them directly then they’ll bundle them up as enticements to buy more expensive items like smartphones. We’re already seeing this happening. There’s also a growing momentum as more and more OEMs release their wares.

The original iPhone sold about 6 million units in its first year. Do you think the Apple Watch will sell more? A quick glance at analyst predictions reveals expectations of anywhere from 10 million to 50 million sales of the Apple Watch alone in 2015.

Android Wear is gearing up for a big year. Expect the same strengths as you see in the wider Android smartphone market – a range of different prices, hardware permutations, and form factors.

Smartwatches will carve some kind of market out, when this many OEMs throw this kind of weight behind a new product category it’s not likely to completely fail. We just don’t know big it will be.

Remember that the marketing machine never gets tired. It will pursue you endlessly. Maybe you are craving a smartwatch and you just don’t know it yet. How will you feel when everyone else has one? You said you’d never buy a mobile phone. On reflection, you do want a smartwatch don’t you? Search your feelings. You know it to be true.