Wearables: The Next Big Thing or The Big Flop?

At the recent Google I/O 2016 conference, Google announced improvements to Android Wear 2.0 to improve the user experience. The most important improvement is support for standalone apps so that the smart wearables can offer full functionality even without the smartphone. In addition, the new Android Wear 2.0 will be able to recognise automatically the type of exercise a user is about to perform.

Massive flop?

The updates on Android Wear 2.0 are a much needed boost to improve the usability of wearable electronics (wearables) running on Android. In the newly published CE2017 research, sales of wearables are projected to hit 215 million units in 2020, a massive 30% downward revision compared to the previous edition. Sales of the higher priced and full-featured smart wearables are projected to account for slightly more than half of total sales in 2020. Previously, sales of smart wearables were projected to overtake the cheaper activity wearables in 2017.


Mixed success

Apple’s Midas touch on smartphones and tablets failed to rub off on the widely anticipated entrance of its Apple Watch in 2015. The Apple Watch is expensive and has poor battery life and limited functionality. The Apple Watch feels like a me-too product that failed to differentiate itself from any other smart wearables in the market. Other manufacturers failed to take advantage of Apple’s rare misstep as they were also plagued by battery issues and hampered by poor usability of Android Wear.

While the Apple Watch failed to ignite the smart wearables market, Apple managed to garner a commanding 45% market share in 2016. Clearly there are enough consumers who are willing to pay for an expensive electronic device on the wrist with limited functionality. One key reason for Apple’s massive market share is the appeal of the Apple brand itself. Consumers are buying Apple Watch to look cool, much like a fashion accessory. Wearing an Apple Watch (US$299) is a conversation starter and attention grabber compared to paying US$360 for a mid-priced mechanical watch.

Work in progress

Wearables remains a key growth category for manufacturers and retailers. Sales of wearables are projected to exceed US$44 billion by 2021, a 138% increase over the forecast period. Manufacturers must be committed to the development of wearables. Wearables may be the devices of the future, but consumers seem most keen on functionality that currently exists on other devices, with location and health tracking functions ranked highly, according to the Hyperconnectivity Survey conducted by Euromonitor International.

Due to the importance of smaller form factor and slimness that consumers place on mobile devices, it is currently technologically impossible for manufacturers to create an all-in-one wearable that fulfils consumers’ needs. Manufacturers need to launch products that fulfil specific functions, thereby creating a diverse range of products catering to specific consumer demographics and needs.