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Thursday, 01 September 2016 11:11

Do we need another smartwatch, fitness band, and now phatch? Featured

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Do we need another smartwatch, fitness band, and now phatch? The answer is emphatically yes – this “category”, after a few false starts, is just starting to gather momentum.

Samsung outdid the rest today with the announcement of the Gear S3 – a smart watch with 3/4G smartphone capability, and a huge range of sensors that has at last broken the symbiotic tether between so-called smart devices and smartphones.

The new device/category I call it a smart phatch (phone/watch which sounds better than a watphone) — pushes the boundaries of what can be, and I suspect it is just the beginning of the next wave of miniaturisation that is enabled by technology.

You see, 12 months ago we did not have 64-layer NAND; we did not have Gorilla Glass SR+ (as hard as Sapphire), and we did not have the silicon — LTE modem/eSIM that allows it to be used as a phone. I am not too sure if the eSIM will need a separate telco account or if it will clone your existing smartphone – I suspect the latter may work.

The wearables market is hotting up, but it is also polarising. It ranges from the one-chip, two or three-axis accelerometer (pedometer, accelerometer, barometer) at the lower end (think FitBit and the countless fitness bands); in the middle, the addition of continuous heart-rate monitor, GPS, galvanic skin response, UV, (Microsoft Band 2); to smart watches with music player/streamer, microphone, speaker, and now 3/4G LTE (Samsung Gear S3).

To complicate matters, health monitoring is creeping into headphones (Samsung IconX), clothing, belts and shoes (Nike).

IDC forecasts that the wearable market is again on the ascent after “two generations of sock draw fillers” (useless products). The table below shows 79 million units were shipped in 2015, and that will grow by nearly 30% to 101.9M by the end of 2016 and to 213.6M by 2020.

Top Wearable Products with Shipments, Market Share and 5-Year CAGR (shipments in millions)

Product

2015 Shipments

2015 Market Share

2016* Shipments

2016* Market Share

2020* Shipments

2020* Market Share

2016-2020 CAGR

Watch

31.9

40.4%

41.8

41.0%

111.3

52.1%

27.8%

Wrist Band

39.6

50.2%

51.4

50.5%

60.8

28.5%

4.3%

Eyewear

0.1

0.2%

0.2

0.2%

18.8

8.8%

201.2%

Clothing

0.4

0.6%

2.2

2.2%

15.6

7.3%

62.6%

Others

6.8

8.7%

6.2

6.1%

7.1

3.3%

3.5%

Total

79.0

100.0%

101.9

100.0%

213.6

100.0%

20.3%

Source: IDC Worldwide Quarterly Wearable Device Tracker, June 15, 2016

The growth will be at the expense of the single sensor fitness bands that don’t run apps and will lose out to smartwatches as they gain more features and sensors – albeit at higher prices. “Future growth will come from basic smart watches that provide some fitness/sleep tracking. Traditional fashion brands like Fossil and health/fitness companies like Fitbit and Withings will help this segment grow,” the report says.

To put the premium Gear S3 in perspective, Samsung would not expect it to outsell the mid-range Gear S2 or its  excellent Gear Fit 2 as these occupy different market niches.

I think this is precisely where Apple made a huge mistake with positioning its Watch as a premium product at an eye watering price although IDC says it sold 11.6 million units in 2015. Canalys agrees but says it could be as low as seven million after returns and that is way, way down from Apple's stated forecast of 24.4 million. To gain the market share it predicted, it needed a broader range instead of a one-size-fits-all strategy (and it is a basic 2-axis accelerometer with heart-rate monitor after all) with different bands.

IDC also predicts that eyewear a.k.a. Google Glass style will make a comeback and account for nearly 20% of wearables in 2020. Google’s Glass was ahead of its time – it had low social acceptance and also needed a few more years of technology to offer what it promised. “Initially, such devices are expected to bring a transformational shift in mobile computing to select industries and job functions. However, IDC anticipates some hardware providers will also offer consumer-friendly options. Although this category will account for less than 10% of wearable device shipments by 2020, all eyes are on this lucrative category as it will account for more than 40% of the total revenue of the Wearables market due to the high prices for specialized commercial devices,” the report adds.

Where to next?

I think Samsung has taken a giant lead and with that LG, Huawei, Sony, Lenovo (Moto) and more will both follow and try to outdo the Gear S3. It has found the right mix of price, aesthetics, personalisation, functionality, awareness, and independence from other devices (notably smartphones).

Apple will continue to be Apple – its reasons and directions are its own, but it has blown any semblance of market domination in the category it helped to re-define.

Regarding functionality, I don’t see that a lot more can fit into the current watch format – at least for now. Samsung tried a camera in its original Gear – sock draw. I see the major advances over the next few years in the ecosystem. It matters not that it uses Tizen as the OS – what matters is market penetration and the fact that it is a small step to write for Android Wear and compile for Tizen.

Samsung’s release of Knox to third party developers opens this up to commercial use. The BMW link is just a step away from remote keyless lock and entry. It is Samsung (and Android) Pay will be more pervasive than Apple Pay simple because they will have a significant market share.

So the old NASA mantra applies — as it does to all things tech  faster, cheaper and better. But for now, the Gear S3 is the wearable of the moment.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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