The Smartwatch Market: Where Do We Go From Here?
Editor’s Note: Today’s post was written by leading San Francisco smart watch and mobile app development firm, Stanfy. (thanks for reaching out, Ann)
Having rocked the startup world two years ago with their successful crowd funding campaign on Kickstarter, Pebble quickly became the #1 choice among smart watches for consumers – and created some serious competition for market giants in wearables such as Apple, Google, Samsung, LG and Amazon.
Today, Pebble is arguably the most successful independent smart watch producer with $43 million in revenue last year, with hopes of doubling that again this year. Pebble is also one of the most successful startups of the Silicon Valley, as they managed to get to the top with only $25 million in venture funding.
According to 2013 data, Pebble took 20% of the market, or about 400k units sold. Furthermore, sales picked up even faster at the end of the year and momentum continued into the first quarter of 2014. With the launch of the upscale Pebble Steel and a new app store, Pebble became the top selling smart watch of the year.
According to Canalys report, Pebble has now captured 35% of the smart watch market, pushing back big brands like Sony and Samsung with less than 30% each.
This is a big victory for the small Pebble team; however, it’s not the end of the war.
Google has big plans on invading the wearable ecosystem as a whole, and Apple’s iWatch is just about to come out. So, the stakes are high.
Eric Migicovsky, Pebble CEO, isn’t threatened. In one of his interviews, Migicovsky said, “It’s exciting to see this market grow so quickly – enabling more interesting use cases and keeping all of us laser-focused on creating the very best user experiences we can.”
There are a couple of things that make Pebble stand out.
First of all, the Pebble Smartwatch is compatible with both iOS and Android devices. And, they offer important tech and design features: waterproof, stainless steel body, a battery friendly E-ink Display, low energy Bluetooth 4.0 connectivity, long battery life from 5-7 days etc.
Perhaps more importantly, Pebble continues to build a large community of app developers.
It’s All About The Apps
Smart watches are a new, and very appealing, playground for adventurous developers and marketers. So, their number is growing fast.
“We’re working to get the software and the developer experience up to par so the people can build really interesting and compelling apps,” said Eric Migicovsky in his interview to Forbes.
All of this sounds enticing, but what exactly do smart watches do?
For now, it’s a kind of a geeky device for pushing smartphone alerts/notifications to your wrist – plus fitness and health monitoring features.
Although these are cool features, NPD Executive Director & Analyst Ben Arnold summed up the state of the smart watch nicely when he said, “this is still a product that’s looking for a problem to solve”.
It appears that in the near future, business, fitness and music apps will be the most popular reasons for buying a smart watch. Handling voice commands is probably the next big attractive feature.
And Google is on it. At the last Google IO, the company proudly announced a few new features for Android Wear, including voice dictation. Now, both Google Now and Apple Siri can respond to spoken queries. This may end up playing a big role in future smart watches. Pebble needs to be concerned, because they cannot process voice commands without using a phone.
While developers are still figuring out how to benefit from smart watch platforms and users are just getting used to them, experts forecast huge growth for the smart watch market in the upcoming years.
“The smart watch market is poised to continue to grow in 2014″said Ben Arnold from NPD. “With nearly $100 million in US sales in less than a year, the category is off to a promising start with just two major brands.”
To be more precise, a GigaOm report stated, “Estimates the global market for wearables in health and fitness could reach 170 million devices by 2017.”
Indeed, there’s one big reason to believe the smart watch market could be huge: People still like to wear watches.
According to consumer surveys, 55% of people around the world wear a watch. So, the whole idea of having an Internet-connected watch is not as alien for your average consumer as, say, the concept of Google Glass.
Another consumer survey found that 20% of buyers are interested in purchasing a smart watch, with younger consumers showing the most interest. Among 16- to 24-year-olds, 30% said they are interested in buying a smart watch, while 25% of 25- to 34-year-olds reported interest.
The Next Round of Innovation
In the future, experts predict a merger between smart watches and smart bands as well as a high level of adoption of smart wrist devices overalls. Indeed, it is expected that one in 20 smartphones will be paired in some way with smart watches, soon. Pairing with a smartphone is a requirement for most smart watches today, and we don’t see that changing much in the near future.
Another obvious area for improvement is battery life, is a common pain point for all wearables. Smart watches are commonly used for sleep tracking and health monitoring, so they need to function 24/7 for as long as possible. Charging is always an obstacle in this process, so perhaps using kinetic energy might be the answer for the future.
NFC is a big opportunity, too, because smart watches can use it for easy wireless payments. Sony has made first steps in this direction, and others are sure to follow. If this works as well as promised, wireless watch payments just might be the killer app that has so far eluded the smart watch category.
Smart watches are also expected to progress not only in features, but in style. For now, most models like those from LG, Samsung and Pebble have a sporty-geeky look, whereas many consumers are waiting for a more sophisticated sleek wrist watch.
Pebble’s CEO Migicovsky isn’t phased by the challenges. In fact, Eric is enthusiastic about his product and is sure they are going to succeed: “There’s a ton of hardware inside Pebble. We future proofed it.”
It’s still early. But with so many incumbent manufacturers and nimble, savvy players like Pebble fully engaged, the smart watch market certainly has a lot more room to go.