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Smartwatch Horse Race to Begin on Friday: The Apple v. Samsung battle expands


Since both Samsung and Apple's public announcements and Samsung's release of their respective smartwatch strategies, the media has been awash with discussion about whether these devices will be flops or major CE hits. Until the numbers actually come in, all we can add is more speculation, but let's look at what's been successful in the market thus far and where IoT is taking us.

Friday's fling into fashion

If we think about what's NOT worked so far as CE device offerings, wearables, until the past few quarters, have been far too bulky, have not considered fashion and form but only function (and that was limited too), and have really not had a mass-market device appeal. Samsung's Gear™ has been taking off, just as their smartphone devices have picked up quarter-over-quarter, making its way back from the hits it has taken from the previous year's sales highs. The difference has been attention returned to functionality and quality of device for Samsung. It has carefully worked to provide feature-rich, solid feel, and fashion-aware devices to its global markets, especially emerging markets and China in particular, as FT notes.

Apple has kept its eye on the high-priced, quality-centric market rather than competing, as Samsung has, in a lower priced market level. That step into lower-priced devices cost Samsung heavily because it did not present the quality demanded and Chinese rivals Xiaomi, Lenovo, and Huawei took swift advantage of that misstep by Samsung. For the past few quarters, Samsung has had to work to regain that lost market share and reputation in the Chinese and emerging markets. Apple, unlike Samsung, stayed its course, despite losing out on opportunities at lower-priced market sectors.

Smartwatches may smart the wallet

Why talk about smartphones when we're concerned with smartwatches? Simply put, the biggest question out there is if the Apple Watch will appeal to consumers and price always matters in that equation. Not that Samsung's Gear™ is inexpensive, for the most part these devices are likely to be competitively priced, except for Apple's high-end, luxury Watch Edition series which will hit in the US $10,000+ range. So what do we learn from what's happened in smartphones to presage a bit what might become of the smartwatch wars about to start?

Well, quality plus form and function matter to consumers. If a consumer is going to drop some money for a smart device, quality and fully-featured capabilities are essential. Stepping down to downgrade the price is not the answer, as Samsung learned the hard way last year. Apple's strategy is clearly aware of this market economy moment, and it looks as though Samsung has, as they have said, completed their recovery and are on the upswing again. Likely why the Gear series is in a holding pattern. Rather than rushing in with quick upgrades that do not amount to much for the money, taking a slower pace for next-generation devices is likely going to be the new norm for higher-end smart wearables. That's good for consumers and for OEMs who really cannot sustain the turn-over pace we've seen over the past couple of years in the smartphone market.

More expensive watches are not typically something consumers think to replace quickly, there's a difference with introducing a smart watch versus a smart phone. Mobile phones had no precedent, watches have a very long series of precedents and are already embedded in consumers' behaviors, but not as a tech device at the high-end, high-fashion end. We think of tech watches in the disposable under US $100 or even US $50 range for sports and outdoors (or the old Casio calculator watches). What the new smartwatch wearable devices will bring is a new way of thinking about watches culturally, as well as technologically. That adds an important variable and one that's not really been discussed in the press, a variable that may or may not pattern with smartphone commoditization trends. Time will tell.

Lisa Ann Cairns, Ph.D.
Written on Tuesday, 07 April 2015 13:50 by Lisa Ann Cairns, Ph.D.

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