Analyst Angle: Changing consumer views on wearables … or not?

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Last year, iGR fielded one of its many consumer surveys and focused on wearable devices (watches, fitness bands, etc.) and connected cars. The survey was conducted in August 2013. In the survey, we asked about how consumers used their mobile devices, their awareness of new wearable devices and their interest in using the new capabilities. In 2013, iGR published a report forecasting the market for wearables.
In April of 2014, iGR conducted a large U.S. consumer survey and asked the same wearables awareness questions. In this column we shall discuss the differences between the two surveys as it relates to wearables.
For the wearables category, we asked questions on fitness-centric devices and on smart watches. Between August 2013 and April 2014, consumer familiarity with both fitness devices and smart watches was unchanged. In fact, the responses to these questions were almost identical. Given the amount of press and new product launches (think of the Android watches that launched in that time), this is both a little surprising and certainly disappointing for the industry. The message from this: the industry needs to try much harder to educate the average consumer of the availability of these devices.
Those who were aware of fitness devices and smart watches were asked about their interest in purchasing one of the devices. Note that no prices were given, but the question did give examples of current products. For the fitness devices, examples were Fitbit Flex, Basis and Jawbone Up. For the smart watches, the examples given were the Pebble and the Sony SmartWatch.
The results of the “interest in buying” questions are not good for either category. For fitness devices, those who said they were “interested” or “very interested” in purchasing (and remember these are folks who are aware of the category and the devices) fell from 38% in August 2103, to 28% in April 2014 (the fall is well outside the margin of error for the survey – it is significant). Where did the 10% who were previously interested go? Not to the undecided category; they became “uninterested” or “very uninterested.” In other words, they looked at the products, examined the options and decided they did not want to buy.
For the smart watches, the news is no better. In August 2013, 29% said they were “interested” or “very interested” in buying a smart watch (again remember these are people who are familiar with the product category). But by April 2014, this number had fallen to 17%. Again, more people did not become undecided; they simply switched from “interested” to “uninterested.”
The one sliver of good news for fitness devices was that slightly more people said they were using the devices in April than in August. The increase is within the margin of error for the survey and it is still a small number. For smart watches, the percentages of consumers saying they used one dropped significantly (the drop was bigger than the survey’s margin of error).
Remember that in 2014 there has been much discussion about the Android smart watches and rumors of an iWatch from Apple. Yet the interest in buying has dropped. This could be due to two reasons:
–The Apple faithful do not like what they currently see in the market and are waiting – patiently – for an iWatch. Then the “Apple effect” will kick in, there will be lines around the block, and they will sell millions … once the device is launched.
–Consumers really do not get the reasons to own and use a smart watch. I have to admit that I fall into this category at present; I love nice watches and have a smart watch, but I will pick up the automatic chronograph every time. Simply put, the original equipment manufacturers need to find a decent reason for consumers to buy and use a smart watch, aside from the obvious need to tell the time.
The same applies to fitness devices. While interest in and use of is higher than for smart watches, we are talking about a few percentage points difference. This market has a lot of development to go before it can be considered mainstream. The main concern is the drop in those interested in buying, even after they became aware of the products – which is also low, by the way. Aside from making more people aware of the devices, the OEMs need to build in valuable functionality. In reality, it seems likely that the functionality of the fitness band and the smart watch will merge – after all, you only have two wrists.
Iain Gillott, the founder and president of iGR, is an acknowledged wireless and mobile industry authority and an accomplished presenter. Gillott has been involved in the wireless industry, as both a vendor and analyst, for over 20 years. IGR was founded in 2000 as iGillottResearch in order to provide in-depth market analysis and data focused exclusively on the wireless and mobile industry. Before founding iGR, Gillott was a Group Vice President in IDC’s Telecommunications practice, managing IDC’s worldwide research on wireless and mobile communications and Internet access, telecom brands, residential and small business telecommunications and telecom billing services. Prior to joining IDC, Gillott was in various technical roles and a proposal manager at EDS (now Hewlett-Packard), responsible for preparing new business proposals to wireless and mobile operators.