Smartwatches are “a niche opportunity at best” and face an uphill struggle to interest the general public – though Apple could change that if it enters the market, a new study has found.
A report by US-based Jackdaw Research surveyed 2,200 US and UK consumers, concluding that there is limited consumer interest in “push” notifications – the main function offered by smartwatches such as the Pebble and Android Wear devices like Samsung’s Gear Live offer.
The survey points to continuing problems with the wearables market, where products such as Google Glass have so far failed to ignite consumer interest, and devices such as fitness trackers show high rates of abandonment.
Smartwatches’ key capability is to notify the wearer on their wrist of information from apps on their phone, via a Bluetooth connection. They can vibrate or display a message on the screen. Users can typically dismiss the alert with a swipe, or in some devices dictate a response via voice dictation.
But Jan Dawson, chief analyst at Jackdaw, says that the appeal of smartwatches rests on how many notifications people are interested in receiving, and whether they can or want to respond to them.
That, the survey found, is very limited.
Carried out online and adjusted for demographic profiles, the survey found that most people only choose to get one or two groups of notifications, such as text messages and emails, on the screen of their phone when it is locked.
Overall, 24% were set up with no notifications at all, 33% from just one app, 15% from two, and 28% from more than two.
Seen in the broader context of the US, where the survey reckons only 50% of adults have a smartphone, that means that only 22% of the overall population use notifications from two or more apps – suggesting a limited market for smartwatches based around push notifications at the outset.
Most people don’t use push notifications on their phone
Most people don’t use ‘push’ notifications on their phone screen – suggesting that smartwatches, which are based on pushing information, will struggle
Photograph: /PR/Jackdaw Research
“We believe that a notification-centric smartwatch experience is only likely to be attractive to people who actively use push notifications for more than two apps,” notes Dawson. “Otherwise, the main function of the watch will remain dormant for much of the day.”
But because typical notifications – text messages and emails – need the user to respond, “the current crop of smartwatches, which don’t provide good response capabilities to such messages, are not a good fit for those [functions] either.”
Poor battery life and response functions
He notes that some people who don’t currently use push notifications might do so if they got a smartwatch, and points to anecdotal information that some people don’t use push notifications because they require them to get their phone out of a pocket. “However, we believe this number is small, and therefore the effect limited,” Dawson notes.
Other problems include limited battery life, which is less than two days for most current models, as well as the problem of responding to notifications that appear on the smartwatch, the size and lack of attractiveness of current offerings, and display quality, says Dawson.
Google showed off its Android Wear software for smartwatches amid great excitement at its I/O conference in June, with attendees receiving a free smartwatch provided by LG or Samsung. New models are expected from Motorola within weeks, and Taiwan’s HTC is widely rumoured to be preparing to enter the fray.
Beyond Samsung, there are a number of other smartwatch makers, including US-based Pebble, launched by a $10m Kickstarter campaign in 2012.
NPD data says that Samsung and Pebble presently dominate the market, with 78% and 18% of sales respectively in the US between October 2013 and May 2014.
However Dawson cautions that hardware vendors should cut back on their investment in the space: “Market growth and the overall revenue opportunity remain poor,” he says.
He suggests would-be new entrants should be cautious about Android Wear, which offers limited chances to tailor its appearance or function, and so risks any hardware running it becoming a commodity: “We would advise most would-be vendors to stay out of the market,” he says, while saying that those who continue should aim to be cross-platform, working with Android and Apple’s iOS.
Time for Apple?
But if Apple decides to enter the wearables field, as has been widely rumoured though not confirmed, this could transform the situation, the report says. Unconfirmed reports have suggested that Apple is partnering with Swatch, or might introduce an “iTime”.
Dawson says: “Two major things could catalyse demand in this market: a player overcoming the significant technological challenges associated with the current smartwatch model, or a player which breaks the model and reinvents the category. Apple seems the likeliest company to do either of these things, and we believe that its entry – likely in late 2014 or early 2015 – will catalyse the market and drive much more rapid growth.”
He thinks that Apple will do “something completely different” – perhaps with a device lacking a screen, or in multiple forms to be worn on different parts of the body.
But he adds that “if Apple is able to create significant innovation in its product, most of the benefits may accrue to Apple itself, with a minimal halo effect [benefitting other vendors] on other vendors.”
Dawson warns that Apple’s arrival, if it happens, “may be a double-edged sword for existing vendors, at best” because it could dominate the market for iPhones, which make up 40% of smartphones in use in the US.
One possible use for a wearable device is for mobile payments, where people pay in a store using their mobile phone via systems such as NFC – which Apple has been rumoured to be investigating. But that too is a limited market: only 9% of adults said in the survey that they “use it all the time”, while 64% said they had never used it, and 10% had tried it once.
“Any smartwatch that incorporates mobile payments cannot simply continue to plough the same furrow as previous systems have,” the report notes, but must have far greater ease of use. It also has to contend with the lack of compatible systems in stores – “one of the biggest barriers to adoption today” – which creates a chicken-and-egg problem.
The survey also found that 80% of the population has never tried a fitness tracker such as the Fitbit, even though they have been available for more than five years.
The main users are in the 18-24 age group, but they have a high abandonment rate, with only 20% of respondents having tried one – of whom 45% (or 9% of the overall population) had given up using them.
Dawson points out that smartwatches can incorporate fitness tracking – but on the evidence that fitness trackers are being abandoned by consumers, that isn’t sufficient cause to drive sales given that trackers typically cost far less than $100, while smartwatches are pricier. Smartwatches can, though, incorporate many functions.