Buoyed by Apple Watch, Wearable Tech Poised for a Boom
During an interview this summer in Chicago, Paul Roth, AT&T's president of retail sales and services, described wearable devices as the "future of retail" before adding, "It's a niche market."
That's why the tech industry is looking to Apple to do what it does best: Take a budding technology, package it neatly and blow it up into mainstream success. And if any product category needs such an explosion, it's the smartwatch.
"It's all in beta, whether it's the product or the marketing," one agency executive who works with smartphone manufacturers said of the devices. Another added, "It's such a young area. There are still a tiny bit of people that are predisposed to buy this stuff. … But that was true of smartphones."
To date, only a small sliver of consumers (mostly on the tech-obsessed coasts) have bought a smartwatch. Everyone else seems turned off by their price and, more importantly, is not exactly sure what they do.
A few marketers, such as Samsung, have run splashy ads for the devices, but they haven't gone full-force in media buying, partly because the products have a long way to go. Another big reason is that most players in the space have been waiting to see what Apple, with its much-anticipated launch last week, would bring to the game.
"I don't think marketing is the solution to the problem," said Jan Dawson, chief analyst with Jackdaw Research. "A more compelling product is the solution."
Apple may have the answer. "Others have created smartwatches as technology products, but Apple has created a smartwatch that's a fashion product," Mr. Dawson added in a research note, "and that will make a huge difference."
For now, consumers are more accepting of fitness-trackers. Shipments topped 13 million last year, according to Park Associates, although their owners have a habit of abandoning them. Compare that to the 2 million units Citibank projects Samsung will ship of its wearable devices this year and the 78 million smartphones Samsung sold in its most recent quarter.
But weak consumer demand hasn't stopped a slew of tech giants from introducing digital watches: LG, Motorola, Sony, Asus and Intel all have skin in the game. Even AT&T released one in collaboration with Timex and Qualcomm. Analysts expect Microsoft and Amazon to also jump into the fray.
Concerns about battery life have kept some consumers at bay. Aesthetics matter, too. Pebble, a scrappy pioneer that has distributed around 400,000 smartwatches since 2012, helped define the category. As has its original design: boxy, mechanical and geeky. Recent entrants are leading with their fashion credentials. Motorola, LG and Samsung all unmasked circular devices the week before Apple. An introductory video for LG's G Watch touted its "classic watch design."
Some observers said these efforts will fall short. "The problem isn't the form factor; it's much more about what they do," said Mr. Dawson. "The main functions are not what most people are looking for. And even if you are looking for them, they don't do them well."
At the moment, a smartwatch does what smartphones do -- checks email and texts; runs apps; responds to voice-controls -- for around half the cost (most sell for around $300). Before Apple, they've been "gadgets that are miniaturized smartphones," said J.P. Gownder, an analyst with Forrester Research. Device-makers hadn't made the case to consumers that the devices were anything beyond their smartphones, shrunken to their wrists.
With smartwatches, the timeline for churning out products has shortened considerably. Companies are putting out next-generation devices within months, not years. Apple's entrance will surely prod its rivals along even faster.