Smartwatches Expected to Top Wish Lists This Holiday Season

Consumer Interest In Wearables Expected To Peak In Coming Months

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Apple Watch
Apple Watch Credit: Apple

Apple's release of its smartwatch couldn't come at a better time for other wearable brands. The company is slated to make its first holiday season debut in 2015, and as a result, other device manufacturers will likely benefit.

The Cupertino, Calif.-based company will be selling its smartwatch -- simply called Watch -- at physical stores other than its own this holiday season, as the device is set to go on sale at both Best Buy and Target. Yet for consumers who don't want to spend $350 or more, other brands like Pebble, which start at about $100, will be appealing, experts say.

"One advantage as a category is wearables are very giftable," said Sarah Williams, partner and creative director at New York-based Beardwood. "While people tend to buy across the category and experiment, they may start with something like Pebble and later trade up to the top tier with Apple."

That's because when it comes to wearable tech, most people will want something that offers both style and fashion credibility, something the Apple Watch has, Ms. Williams said.

"People will want to feel the wearable fits their personal style before device functionality," Ms. Williams added. "Google Glass was tech forward, but too geeky for people to wear. That's a barrier for people and brands like Apple or TAG Heuer ... will be what people want this holiday season."

The lines between the fashion and tech world continue to blur. Intel, for example, recently became a technology sponsor for the Council of Fashion Designers of America, working with design-focused retailer Opening Ceremony to develop a fashion-forward smart bracelet called Mica. TAG Heuer recently unveiled its $1,500 smartwatch powered by Android Wear, and Fossil agreed to purchase Misfit, a fitness tracker wearable, for $260 million this week.

Still, other obstacles remain for the wearable category, Ms. Williams said, adding that educating consumers about the devices will be key this holiday season.

"There is a lot of education and awareness that goes along with wearables, and interactive displays will be the best way to engage the consumer," she said. "We should never count out the personal experience; talking to educated and knowledgeable sales associates will be important for helping consumers navigate different brands and determine what their needs are."

Ryan Lee, user experience lead at Microsoft Health, also believes consumer education will be key this holiday season.

"Apple does a good job speaking to all the different consumers," said Mr. Lee, who helped develop both the Microsoft Band and its older brother, the Band 2. "But Microsoft pushes a lot of what it does on the fitness level. Our advertising shows people running and doing active things."

Mr. Arnold added that consumers will likely see advertising that talks about the product's benefits and explain what exactly a smartwatch does. "The advertising will likely tell consumers that smartwatches do more than alert you when you get a text or phone call. A smartwatch can control things and measure your heart rate."

Wearables have seen rapid growth in consumer adoption this year, with some 39 million U.S. adults 18 and older expected to use smartwatches and fitness trackers, a 58% jump over the same time last year, according to a report released last month by eMarketer. Additionally, consumer penetration among U.S. adults is just 16%; that number is expected to double by 2018 to about 82 million users, eMarketer said.

Though Apple hasn't released its sales figures for its Watch, Strategy Analytics estimated the company has already sold about 4 million units. Excluding Apple's smartwatch, the wearable category has seen 3% revenue growth when compared to last year. "That means the rest of the industry isn't growing as fast as Apple," Mr. Arnold said. "Much of the growth in that space is likely being fueled by Apple.

"There is a lot more awareness this holiday season," Mr. Arnold added. "We've gotten to the point where there isn't just one brand and what we've been seeing is there is a lot more price elasticity in the wearable space. It's not just Pebble and Samsung anymore."

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