Despite a few downturns (like several startups announcing headcount reduction, being sold off, or shutting down entirely), the numbers of the wearables market for their first quarter of 2016 are as astounding as they are encouraging. With total shipment volumes of wearables reaching 19.7 million units in 1Q16, the output of goods strongly exceeded 1Q15 unit shipments by 7.9 million units—a 67.2 percent increase.
Devices like fitness trackers and smartwatches were unveiled at major events like technology shows, prices were significantly reduced after the holidays, and a significant increase in consumer interest with emerging wearable categories (particularly clothing and footwear) collectively factored into the increase that occurred over the one-year span. Two major areas that experienced the greatest amount of continued growth were smartwatches and basic wearables (devices that don’t run on third party applications). Some might consider this a bit of an anomaly since these two types of wearables are vastly different. Smartwatches try offering an all-in-one experience with their features, while basic wearables have a more focused approach.
The increase in consumer interest reveals a growing wearables trend not just in the United States, but across the entire world. While the statistics mentioned above paint a feasible picture of how the wearables market has thrived, there are more specific attributing factors worth evaluating. Kim Rowe is the founder and CEO of RoweBots Limited, and has been involved in the wearables market for years. Considering the wealth of knowledge and experience he has accrued, he’s an ideal candidate to discuss and break down the wearables market’s recent successes. Mr. Rowe was generous enough to offer his thoughts on these occurrences, where he believes the industry is headed, and how different types of wearables are being perceived by consumers across the world.
WDD: Smartwatches and basics were the driving force behind the wearable industry’s tremendous first quarter. Would you say we’re seeing more of a fashion trend or are people finding these gadgets and devices to be genuinely resourceful?
Rowe: There are several different segments for wearable devices, and I think most of them are in different phases of development. A lot of people have smartwatches, for example, which have a lot of manufacturers. Most wearers (by volume) haven’t been in North America or Europe (where they tend to be more fashion-conscious), but more in Asia where smartwatches are cheaper. Making wearables more invisible and traditional-looking is one particular direction the industry is headed in North American and European markets.
Some segments we could talk about like rings and bracelets have a different kind of appeal to women in particular, depending on their design. On the contrary, a lot of clothing-based wearables (like smart clothing) have struggled. There’s been a few success stories (like heated stocks) but the numbers are pretty small. I’ve seen some good ideas—like a jacket connecting with your GPS and taps your shoulder when you have to make a certain turn. That’s a prime example of a fashion first project (a coat) that has this extra feature.
WDD: How are basic wearables maintaining sales to keep up with all-in-one wearables like smartwatches?
Rowe: To compete with smartwatches, your device has to be more convenient to use. Smartwatches have some notable drawbacks like power management. There are a lot of android watches that I would call premium brands (traditional watches), which include some kind of notification feature. You’ll find features like Bluetooth radio with these notification features in the same watch that they already had. At the store, you may now have the option of installing these notification features. High-end watches are still an expensive fashion statement and don’t have features like measuring vital signs.
Of course, Apple has done a good job providing a broad range of smartwatch features, and I think a lot of Chinese manufacturers have as well. They’re even getting to the point of putting in radios and cellphone-like features. Other than smartwatches that just notify, you have a real problem with power conservation. Like I mentioned earlier, some need to take a more fashionable approach while improving their battery life, and you’ll still see demand for their products. It’s a big deal if you don’t have to charge your device every day.
WDD: Depending on who you talk to in the industry, some argue that basic wearables and smartwatches aren’t necessarily in competition with each other. Why do you think this is or isn’t the case?
Rowe: I think there’s definitely some overlap in features and because of that, there’s going to be some degree of competition. You’re not going to wear a smartwatch on one wrist and smart ring on the other. Most people will be looking for a smartwatch with all-in-one features. Having said that, I think the market is at a stage where all those different wearables really focus on providing one major feature. Because they provide one so well, I don’t think they’re in genuine competition with each other. If I’m a woman, for example, and want to know when my phone rings (maybe I want a notifying vibration), and if my phone’s buried in my purse or I am talking to my friends and don’t hear anything, I can at least feel the phone vibrate. Presumably, that could be a smartwatch or ring feature, but I don’t really see those two as in competition in that case.
WDD: What’s one mutual component found in both smartwatches and basic wearables that’s appealing to consumers and keeping this market going?
Rowe: I think the big thing with smartwatches and other wearables is the notification feature. There’s two key features we’ve seen proven in the marketplace. One is notifications. The other is actually fitness tracking. I think that those are the two things that have really come out as new features other than just displaying the time, and that’s the kind of thing people are kind of rumbling around and trying to find these feature niches in the market. Smartwatches of course can do all of it, but other things like fitness trackers also can do part of it as well. I think both of these aspects are important. The real-time feature is really important too.
WDD: How could the wearables market be growing at this current rate if so many newer companies and startups were sold off or folded?
Rowe: I think there was both a lot of price pressure and sales, which we saw a lot more of in the last year. There’ve been lots of growth but it’s been centered around a select few companies. I also think there’s been a lot of erosion of the market with low-cost players, particularly from China. That’s had a big impact on the market in the sense everybody jumped in at once. There was also a lot of “me too” stuff that I think hurt the market because a few companies (like Apple) and to a lesser extent FitBit focused so much on quality.
Aside from these kinds of companies, a lot of vendors got in and didn’t understand the market. We worked with a company called Kiwi Wearables, and helped them build fitness-type trackers for a specific sport. The interesting part was how they moved from the hardware end of the business because they thought it was too difficult, and focused more on the cloud/analytic part. These companies thought all fitness devices were working more like Alexa—do all analysis in cloud and send it all back, which I see as a big industry trend.
