The wearables market has been relatively quiet recently, in the lull between Apple’s Watch announcement and any potential holiday moves the manufacturers may make. And those moves, most likely, will be focused on discounts in a bid to stimulate growth in the smartwatch and tracker markets once again.
The interesting dichotomy facing the wearables market right now is that ownership (that is, people owning and using) of both smartwatches and activity trackers has shot up during the pandemic period, while sales have actually decreased. While this may seem rather counter-intuitive, it’s actually a good sign for the market: it means that consumers are giving previously-abandoned devices a second chance, pulling them out of the drawer of endless old electronics and strapping them back on – or passing older models to friends and family.
This initiative is almost certainly a result of lockdowns and general concerns over the pandemic, with health and basic fitness needs coming back to the fore. The goal of 10,000 steps per day is far harder with less frequent steps away from the home, causing more people to re-focus on their efforts, and even the most basic activity tracker can help monitor that activity. Further, more recent smartwatches that perhaps did not quite meet expectations before are being view less as a “smart” adjunct (or replacement) for smartphone features and more as a health monitor. Pulse Ox, heart rate, sleep cycles and more can all be used as an indicator of general health, which is suddenly a fundamental metric for our overall health and safety.
This all helps the smartwatch industry. These re-discovered devices are most likely more than a year old, meaning there are better health features available now. If these “new” wearers can be convinced this time around that the smartwatch is a “must have”, new sales activity will follow. That circles back to our original point: expect to see some significant smartwatch discounts in the pre-holiday period. But do not mistake them for an act of desperation on the part of the manufacturers, but rather an opportunity to grab new market share potentially. After all, customers of older, non-Apple brand watches are not necessarily loyal to their old brand (they did discard it once after all), and could be swayed to a more appropriate model.
This is also an opportunity for the wireless carriers to increase their cellular smartwatch bases, with Q4 typically seeing more device sales than other quarters (meaning the customer in the store ready to be up-sold on a watch) but is a customer that can be sold on feature benefits such as a wireless connection, particularly if the carriers look to discount that connection, or significantly subsidize the smartwatch, as part of the deal.
Of course, all of this is dependent on how the pandemic progresses over the holiday period. While it has driven the ownership spike, it has also resulted in fewer smartwatch sales, primarily because the smartwatch is a device that consumers want to buy in person, rather than online. Only time will tell.
The Wearables Ownership Forecast will be published in the next week.