The Wearables market is in for a huge change in 2015. In July last year, Gartner placed “wearables” just over the hump of the “peak of inflated expectations” – the point where there is a lot of press around success stories in the market, but brings with it many less publicized product failures as well. Gartner expects the growth of wearables to take 5-10 years to make it a mass reach technology similar to that of the Smartphone (now at 80% global penetration).
The number of wearables on display at CES this year is just a glimpse at the number of failures that are to come (Belty anyone?) with only a few that will really make any headway. The wearables market has been incredibly focused on promoting “fitness” and “health” actions – so specialist wearables like Nike, FitBit and Jawbone have been able to make early leads in the space and have dominated sales to date with 97% share.
In line with expectations based on wearables’ position on the technology hype cycle, global ownership is still very low. A question from a GWI (Global Web Index) research study from late 2014 asked which devices the global sample personally owned. Smart watches and Smart wristbands were owned by only 9% and 7%, respectively. With so much media coverage, why would penetration not be higher?
Well, it’s not unreasonable to see why the market hasn’t catapulted as consumers seem disillusioned with the current offering. It is estimated that 21% of American adults own a wearable device (activity monitor, health tracker and/or a smart watch) today. However, one third of them stop using their device after six months.
The wearables market is at a cross roads where the hype of what they could deliver isn’t the reality. To most consumers, a ‘wearable’ is fitness tracker. Something you use to help motivate you to stay fit and healthy. And you can’t blame them, as most of the modern wearables market is comprised of specialized health trackers.
The smart watch, although long in history, dating back to 1971, has only become an affordable wearable for the masses in the last few years correlating with “smart watch” search trends. (For comparison, included below is also “smart watch” vs “smartphone” search trend, clearly dwarfing wearables as respective global market size would lead us to expect).
So, smart watches have an opportunity to really catapult the wearables market forward as they offer various functionality, beyond just activity tracking, which may keep consumers interested and connected longer than 6 months. In fact, an eMarketer report suggested that in top markets such as Germany, UK and the US – functionality is a key purchase criteria for smart watches.
Given the current low levels of ownership, clearly the smart watches out there today are just not that good at exciting us to purchase. The problems to be solved – usefulness, battery life, appearance – still haven’t been. Although, we’ve seen a few good runs recently to tackle these things, for example Withings Activite line’s design has been heralded many times in the press.
Although, there seems to be increasing evidence that people find the notifications on smart watches useful in reducing the number of times you need to pull your phone out of your pocket or purse. It remains, that a killer app or use case has not yet appeared that has incited the ‘can’t live without it’ mentality.
So, where is the smart watch market at?
There was an estimated 6.1 Million smart watch shipments in 2014. Most of that split between Samsung & Pebble in 2014.
Strong growth globally is expected in 2015. The GWI device summary show’s that while current ownership of smart watches is only at about 9%, over 40% of global consumers intend to purchase within 5 years.
While intention to purchase a smart watch is quite strong, 70% of likely smart watch buyers say a seamless connection across devices will influence wearable brand choice.
So, wearables that don’t play nice with your preferred device OS will be a hard sell. Which explains why Futuresource, a UK based research company, found that iPhone owners exhibited the biggest change in purchase intent after Apple announced their watch in September.
Apple Enters the Market
When Apple enters a market, it brings with it immense hype and an accompanying huge wave of fresh developer interest. Apple has an extremely loyal and innovative app developer community. It is this community and their deep focus on design that will help make the Apple Watch a great success.
Apple is no stranger to being late to market. There were already music players, phones and tablets available before it entered those markets, but what Apple has proven time and again is that they can provide aesthetics and function, something that has been eluding the smart watch industry thus far.
In fact, analysts’ predictions for Apple Watch sales vary between 10 – 35 million in 2015. If we take the mid-range estimate from JP Morgan at 26 million sold in 2015, Apple Watch would be almost as big as the entire Swiss watch industry – and the number one watchmaker in market share.
It is important to note though, Apple forecasts only 5-6 million in sales, so we’re likely to see these same analysts berate Apple later in the year for not hitting their predictions. Product signalling from early Apple Watch users will start to bring on board new users helping Apple hit (and potentially exceed) its sales target in 2015. And if Apple hits its own sales targets, they effectively sell the same number of smart watches that the entire industry sold in 2014. And that’s worth noting.
We all know by now what the Apple Watch looks like, but with functionality just as important for consumers as fashion, what’s inside?
Key Built-in Features of the Apple Watch:
‘Hey Siri’ on the iPhone is a big battery drainer, because it means that the device is actively listening for the “Hey Siri” command. On the Apple Watch, the device won’t listen unless you raise your wrist. This means that there will be a lot less battery drain while using Hey Siri on the Apple Watch. Plus, you can use Siri to command your whole life.
NFC (Near Field Communication)
This means that Apple Pay is available from your Apple Watch. With Apple Watch compatibility with older generations including iPhone 5, 5c, and 5s (all earlier models of the iPhone without Apple Pay built in) it means more iPhone users could have access to Apple Pay – bringing digital wallets further.
With the requirement to pair your iPhone with Apple Watch via Bluetooth, we see an instant uplift in users who will have Bluetooth activated at all times. This means that iBeacons will have
Digital Crown & Force Touch
Two new ways to navigate your device. The Digital Crown Designed for finely tuned, accelerated scrolling—without obstructing the Apple Watch display—the Digital Crown makes it easy for the user to scroll through longer pages.
Force Touch is an Apple invention allowing your Watch screen to be able to distinguish between a light touch to a hard touch. This is the new two-finger swipe, four-finger swipe, pinch n zoom gesture control specially designed for the small screen of the Apple Watch where more than one finger starts to block your view.
Glances and Notifications
Glances are a browsable collection of timely and contextually relevant moments from the wearer’s favourite apps. Individually, a glance is a quick view of your app’s most important content. These will be one of the features that users will see and interact with – providing visible user functionality with notifications. Advertisers will need to understand how Glances work and start framing their strategy towards brief content snippets.
HomeKit – HomeKit leverages Siri, letting you control connected devices in your home with just your voice. HomeKit itself simplifies and standardizes how other devices communicate with each other and your Apple devices.
HealthKit (limited accessibility)
All these features add up to one thing. Designing for Apple Watch is different than with previous devices – both developers and advertisers need to let that sink in.
It’s not about replicating for a smaller screen. It’s about finding innovative ways to extend or supplement the functionality of an app to the Apple Watch. With limited internal storage, most of the heavy computation will be done on paired iPhones, with the Apple Watch allowing Glances or Notifications to prompt the user in a brief engagement to decide if they need to pull out their phone.
Apple’s developer site explicitly warns of the difference in building for Apple Watch versus your existing iOS apps
“A WatchKit app complements its containing iOS app; it does not replace it. If you measure interactions with your iOS app in minutes, you can expect interactions with your WatchKit app to be measured in seconds. So keep interactions brief and interfaces simple.”
In essence, the Apple Watch is the projector screen for your iPhone.
So, where could the Apple Watch go in the future?
The GfK Tech Trends 2015 report noted that 56% of people surveyed said they would like a smart watch that operates independently of a smartphone.
History tells us there is an independent future for the Apple Watch. Apple Watch will eventually unbundle from the iPhone which it currently uses for processing power and most storage (having only 8GB internal storage today), the same as the iPhone eventually was unbundled from iTunes.
Currently, the Apple Watch does not support video, but with a precious 18 hour average use battery life, video would be to consuming to support in this iteration. As battery power increases, expect to see Apple add video play-back capabilities to the Apple Watch.
With access to Siri and integration with HomeKit, Bluetooth (iBeacons), and GPS, expect the Apple Watch to be the new HAL 9000, without the homicidal tendencies. Allowing you to control your home with your voice or a simple gesture from your wrist.
The Apple Watch will be the game changer to help to hurdle the wearables industry through the ‘trough of disillusionment’. Even at the lowest sales predictions, the Apple Watch could be the best selling wearable device on the market. The current wearables on offer aren’t providing enough motivation to impact behaviour change. Big data of the early wearables needs to be transformed into big insights and actions.
The Apple Watch’s activity tracker, with extensive research and development from their top secret health & fitness lab, will be the draw for most. Market understanding of the impact of a smart watch’s additional features and capabilities haven’t been fully understood for most consumers. It will be thanks to the early adopters, of which Apple has many, that mainstream users will begin to understand the product’s features, as they signal with each lift of the wrist ‘you are missing out’.
Apple, like only Apple can, will show consumers the benefits of a smart watch over a dedicated fitness tracker. It will make the technology easy to understand and use – and bring with it a host of developers who are eager to partner with Apple to engineer new consumer behaviours. Consumers will ‘get it’.
Content, Not Banners
If Advertisers want to connect with consumers via the Apple Watch they will need to change their approach.
The smart watch screen will be for brand content, not for banners. As advertisers, we keep forcing the traditional ad model on new devices, but the screens of smart watches won’t have enough room for both content and ads.
The smart watch won’t allow us to fall back on standard practices.
So like Apple, we will need to think differently.