Q4 Smart Watch Sales to Slow as Consumers Await Apple Watch, Futuresource Says
Futuresource Consulting sees shipments of smart watches rising by more than 300 percent this year compared with 2013, though Q4 growth will be "slower than some initially forecast" because many early-adopter consumers will defer purchases and wait for the 2015 debut of the Apple Watch, market analyst Oliver Rowntree said on a Futuresource webinar Thursday.
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Apple’s announcement that it will price the Apple Watch at $349 raises "one significant question" whether anyone in the smart watch category can lure the high-end consumer who typically spends $1,500 on a traditional timepiece, Rowntree said. "Apple is best-positioned for this currently as it stands with its premium positioning across different product categories." But it’s "questionable whether consumers would be willing to spend the kind of money that they’re willing to spend on a mechanical watch above $1,500 on a product that has a 1-2-year lifecycle and will be superseded by new models within that kind of time frame," he said. Despite the allure of the Apple Watch, "this could be challenge in really accessing this high-value end of the market," he said. Futuresource sees luxury watch brands such as Piaget showing some "interest" in entering the smart watch business, but they’re "very much cautious" due to the lack of "timelessness" that’s a cache of their traditional products, Rowntree said.
"Largely, it’s early adopters who are using these devices," Rowntree said of the early wave of smart watch owners. "So it’s a degree of curiosity and gadgetry that has driven demand for some of the newer categories of smart watches. To a certain extent it remains to be seen whether these categories can really stand on their own in terms of application and appeal to consumers." For smart watches, Futuresource sees the potential for "very significant" sales growth in the holiday selling season, "given the appeal in price point and curiosity around the category, and a lot of new brands having entered," Rowntree said.
In smart watches, Samsung has been the dominant market share leader, because it "came in very aggressively" in 2013's Q4, "and has been very aggressive since then," Rowntree said. "But we also see sales as linked very strongly with smartphone brand ownership, so those who own a certain brand of smartphone typically buy a smart watch along the same brand lines." That’s not necessarily telling of brand loyalty, however, he said. The trend also is "partly due to lack of awareness that other products do actually work with a different-branded smartphone," he said. "So it remains to be whether that will be a significant determinant in Q4, and moving into next year, of how people purchase their products."
Futuresource thinks Motorola’s Moto 360 smart watch has the potential to be a holiday selling season winner in the category this Q4, Rowntree said. "There’s been a lot positive buzz around the Moto 360, and so our expectation is that it will have some success in Q4 this year. We know there has been a significant volume of orders for it already, so I think that will be a significant player towards the end of this year."
In the "brand landscape" for smart watches in the foreseeable future, "we expect CE vendors to lead the charge, as well as newer specialists who’ve done a very good job positioning themselves within the market," Rowntree said. "We expect a lot more CE brands to enter," though non-CE brands will be "the key driver" over the "longer term," he said. Sports and apparel brands, as well as watch and jewelry brands, will step in aggressively "as the wearables market diversifies, and moves beyond the certain degree of gadgetry that’s dominated so far this year," he said.