Why smartwatches haven’t taken off
The Apple Watch was supposed to reinvigorate the ailing watch market. Yet two years after its release, many of us still don’t wear a watch. For Apple, the product is a marginal revenue generator. While Apple doesn’t reveal sales figures, research firm Canalys estimated that 11.9 million Apple Watches were sold in 2016. That apparently gave them a 49 percent share of the smartwatch market. For comparison, Apple sold 211 million iPhones last year. Using those figures as indicative, at best around 5 percent of iPhone owners also own an Apple Watch. But the percentage is probably lower than that, since some people haven’t upgraded their iPhone in years.
If Apple Watch has half the smartwatch market but hasn’t managed to turn it into a must-have product, then it’s safe to assume the competition is struggling to sell the product too. Or maybe the smartwatch is destined to remain a niche market for Apple, Android Wear manufacturers (like Samsung and Huawei), Fitbit and others.
The key problem for those companies is that few people feel the need to wear a watch at all these days. Certainly hardly anyone I know does. Why is this? Well frankly, there isn’t a good reason to own a watch. Almost all of us already carry around a perfectly adequate timepiece: our smartphones. As for what else a smartwatch can offer, it comes down to two main things: notifications and health tracking.
The irony of notifications on smartwatches is that to get this to work, you need to pair it with…you guessed it, your smartphone. With Apple Watch, the benefit is supposed to be that the notification is less intrusive. For example, if an important email arrives while you’re in a meeting, then your Apple Watch will vibrate gently on your wrist – rather than everyone in the meeting hearing a loud ping from your phone. But this is a dubious benefit, since you end up checking the message either way. No matter how you receive notifications, they frequently interrupt what you’re doing.
I was always more attracted to the second use case for the Apple Watch: health tracking. Indeed I thought I was getting ahead of the market by releasing a book about health tracking, called Trackers, just months before Apple Watch was released in April 2015. My book came out December 2014 and it detailed the precursors of Apple Watch: health tracking products from the likes of Fitbit, Jawbone, BodyMedia, Withings and others. These were all startups – young, ambitious companies with experimental products. I thought the Apple Watch, coming as it did from a huge and popular tech company, would be the tipping point for health trackers.
It was all so promising. When Apple Watch was announced in September 2014, the hardware specs included an accelerometer to measure your body movement and a sensor to measure your heart rate. The design of the watch seemed to meet the high standards of Apple fans. Combine all that with apps that would produce activity reports and other motivational prompts, and the Apple Watch seemed like a hit in the making.
"If notifications are a dud and health tracking isn’t enough of a motivation to buy a smartwatch, what’s left?"
However, it turns out the health benefits weren’t enough to entice tens of millions of people to shell out hundreds of dollars for an Apple Watch. In retrospect, one reason for that is that health tracking is an activity you typically only engage in irregularly. Indeed that was one of the conclusions in my book: once you’ve gathered a few months worth of data, that’s all you really need to understand what your body requires in terms of activity and food in order to keep it running optimally. You may re-gather data in another year or two, but it’s not the type of information you need to collect all day and every day.
In other words, you don’t have to buy a fancy $429+ watch that you’ll wear every day. You could buy a simpler product – say a $100 Fitbit Zip – and the data from that will give you much the same insights after two or three months of usage.
So if notifications are a dud and health tracking isn’t enough of a motivation to buy a smartwatch, what’s left? Apple would like to think that it can eventually compete with the big name Swiss watch manufacturers, like Rolex and Swatch. But so far it has struggled to do that.
When the Apple Watch was first released, the high-end versions were gold-plated and cost several thousand dollars. Apple tried to market this version as a fashion accessory, complete with a 12-page Vogue magazine advert. But of course consumers soon realised there was a big difference in quality between a finely crafted Rolex, with its decades long tradition of craftsmanship, and a digital watch whose technology would become obsolete in a few years.
In September last year, Apple CEO Tim Cook tried to position the Apple Watch as a market leader in the watch industry (not just the smartwatch industry, but the entire watch industry!). He claimed that Apple was the second biggest watchmaker in the world, behind only Rolex, in terms of revenue for 2015. But this was disingenuous. Remember that 2015 was the year Apple Watch launched, with a lot of hype, so hundreds of thousands of Apple fans bought it simply because it was a brand new Apple product. Also factor in that Rolex watches cost thousands of dollars and are a once in a lifetime purchase, not something you upgrade every couple of years. So it was an apples and oranges comparison by Cook.
All that said, Apple is still improving its watch. The second generation of the Apple Watch, called Series 2, is being marketed more as a sports watch than a fashion accessory. It now has standalone GPS (so you don’t have to carry your smartphone while running) and is waterproof. Series 2 has gotten mostly positive reviews, so it’s doing the job as a fitness tracker – if that’s what you’re looking for.
But if you’re looking for a simple timepiece, you need only pick up your smartphone.