Sourced through Scoop.it from: www.smartwatchgroup.com
Market size: 40 companies have launched smartwatches in 2013. They jointly sold around 3,1 million units, generating a market volume of 700 million USD. The Top 10 companies have a market share of 82%. Next to products which are already on the market, around 150 companies have smartwatches in their development pipeline. Besides this, hundreds of scientific institutions are experimenting with smartwatch technologies, and a big number of tech providers in the area of sensors, displays, etc is working on specific solutions for tomorrow’s smartwatch industry. A central part of the value of smartwatches is made up by software and applications. There are currently around 20,000 smartwatch app developers in the world. Even if this represents only a few percent compared to smartphone app developers, the number is growing exponentially based on available smartwatches with suitable open-source interfaces. Target segments of smartwatches: While the product benefit of today’s typical smartwatches is relatively low, a successful product category has evolved in the last few years: fitness trackers. Companies such as Fitbit, Jawbone, and Nike sold millions of them in 2013. As they are starting to be equipped with displays, the latest fitness trackers can be considered smartwatches (see definition). While only around 1/5th of current smartwatches are targeted at health and fitness purposes, this segment made up 1/2 of all units sold in 2013. If all fitness trackers would be considered – not just the ones considered smartwatches – this relation would be even more extreme. Tracking of physiological parameters is clearly the driver of the smartwatch industry. Many highly relevant applications will evolve out of this. However, the different market segments are quickly growing together. While “conventional” smartwatches integrate more and more physiological sensors, the fitness trackers start to include notifications.
Characteristics of today’s smartwatches: In terms of technology used, around 90% of today’s smartwatches are “companion devices”, meaning that they need the user’s smartwatch to connect to the Internet. In terms of connection between smartphone and smartwatch, Bluetooth Low Energy (BLE) has clearly made the race. Other protocols such as ANT, NFC, WiFi, or ZigBee are close to irrelevant. Some products combine BLE with conventional Bluetooth, in order to reach the needed bandwidth for audio applications. What about standalone smartwatches with integrated mobile phone technology? While some people believe that this will be needed to make smartwatches a success, Smartwatch Group only believes that this makes sense for certain applications such as security (see Limmex and Filip). In most other cases, it makes sense to use the mobile phone as a hub: First, this device is around you almost all the time. Second, integrating BLE instead of a mobile phone technology into a smartwatch is much simpler and cheaper. Third, one mobile phone subscription is enough, reducing recurring costs. In terms of pricing, an average smartwatch sold in 2013 cost USD $225.-. Pricing is still very much hardware-based, with a one-time upfront payment. However, recurring pricing schemes as well as payments for apps will become standard over the coming years, together with bigger price differentiation as product design becomes more sophisticated.