Proving the Business Case for the Internet of Things

Apple takes risk with smartwatch as competition increases

Steve Rogerson
September 14, 2016
 
Apple is takings risks with the latest version of the Apple Watch to return to smartphone growth, according to IHS Technology’s head of mobile analysis Ian Fogg. But it is facing competition from the likes of Alcatel and TomTom.
 
The series two Apple Watch announced this month includes a Nike-brand model and is swim proof, being water resistant to 50m. It uses a faster Apple-designed S2 chipset, with dual core application processor, claimed to be 50 per cent faster, with x2 graphics.
 
Apple has updated the original Apple Watch with the new chipset, but not the other features.
 
The built-in GPS is open to app developers but it has the same square display as the first generation.
 
“Apple addresses some of the rough edges in the first generation smartwatch, including speed, degree of water resistance and ability to accurately track runs when used independently from an iPhone,” said Fogg. “These are sensible but unexciting enhancements. But battery life performance is as yet unclear, the GPS if used for long period may in effect even worsen performance over the first generation model. This will not become clear until Apple Watch series 2 ships.”
 
However, he said that while series two would appeal to consumers who liked the original design, Apple would attract few new admirers with the similar design.
 
“To widen appeal further, we recommend Apple should offer a model with a round display, offer an always-on option, open WatchOS to third party watch faces to re-ignite third-party developer support, and lengthen battery life to several days,” Fogg said. “For now, the increased fitness capabilities and Nike partnerships will keep the Apple Watch business moving, without creating a break out new product category success for Apple as the original iPhone was nine years ago.”
 
Apple has also tightened its guidelines for health app developers by setting strict rules for those that go beyond fitness and wellness into clinical health.
 
This month’s IFA show in Berlin showed that Apple’s position in the wearables market is under threat as a large number companies released products.
 
Alcatel for example launched Move, a series of wearable and lifestyle devices for people of all ages. The series comprises Moveband, Movetime Wifi Watch, Movetrack and Move Track & Talk. All have different features, colours and styles, but all have one thing in common: they are designed for active people with an interest and need to understand their busy lives to make them easier.
 
After the launch of Go Watch last year, Alcatel goes one step further in connecting children with their parents, right from their smartphones, with Move Track & Talk. Parents can ensure their children’s safety from the palms of their hands — making calls, sending voice messages, tracking their location, all from a dedicated user-friendly application.
 

 
“Wearable connectivity is the future of technology and human behaviour,” said Vittorio Di Mauro, general manager of smart connectivity at Alcatel. “It will shape our habits for generations to come. This is why we’ve launched different devices for different ages so together we stay connected. There is a huge opportunity in connected devices for children as a way to reassure parents, me included.”
 
And satnav company TomTom used the show to release two GPS sports watch ranges. The Spark 3 and Runner 3 watches come equipped with route exploration so wearers can explore new trails and find their way back, no matter where their run takes them.
 
“We’re proud to launch the TomTom Spark 3 and Runner 3 now with route exploration, building on our years of experience in mapping and navigation,” said Corinne Vigreux, co-founder and managing director of TomTom Consumer. “Route exploration is more than just a way to get back home safer. It inspires runners to get even more out of their training, increase distance confidently and explore exciting, new routes.”
 
The European wearable devices market alone is forecast to grow at least 70 per cent in 2016, and exponentially around the world.
 
Shipments of wearable devices reached 22.5 million in the second quarter of 2016, according to the International Data Corporation (IDC). Despite a decline in shipments for Apple, the overall market for wearable devices grew 26.1 per cent year over year as new use cases are slowly starting to emerge.
 
"Fitness is the low-hanging fruit for wearables," said Jitesh Ubrani, senior research analyst for IDC. "However, the market is evolving and we're starting to see consumers adopt new functionality, such as communications and mobile payments, while enterprises warm to wearables' productivity potential."
 
While the overall wearables market grew during the quarter, its two categories travelled at different speeds and directions. Basic wearables (devices that do not support third party applications) grew 48.8 per cent from 2Q15 levels while smart wearables (devices that support third party applications) declined 27.2 per cent year over year.
 
"Basic wearables, which include most fitness trackers, have benefited from a combination of factors: a clear value proposition for end-users, an abundant selection of devices from multiple vendors, and affordable price points," said Ramon Llamas, IDC’s research manager for wearables.
 
Basic wearables accounted for 82.8 per cent of all wearable devices shipped during the quarter, and more vendors continue to enter this space.
 
“The danger, however,” said Llamas, “is that most devices end up being copycats of others, making it increasingly difficult to differentiate themselves in a crowded market. Smart wearables, meanwhile, are still struggling to find their place in the market. There is plenty of curiosity about what smart wearables – particularly smartwatches – can do, but they have yet to convince users that they are a must-have item. The good news is that smart wearables are still in their initial stages and vendors are slowly making strides to improve them. But this also means that it will be a slow transition from basic wearables to smart wearables."
 
Fitbit's dominance remains unchallenged for now as the company's name is synonymous with fitness bands. The latest Charge 2 and Flex 2 are indicative that the company is growing up, giving form and function equal importance. Fitbit's recent acquisitions in the mobile payments arena should also help ensure success in the longer term.
 
Xiaomi Mi Bands remain popular in China. In every technology market, Xiaomi has focused on the value conscious consumers, and that trend continues. The recent launch of the Mi Band 2 includes heart rate tracking and still maintains a price below US$20. The challenge for Xiaomi, however, is growing beyond China's borders and onto the global stage.
 
Apple was the only vendor among the market leaders to post a year-over-year decrease in shipment volumes, primarily because it did not launch a new model on the anniversary of its first generation watch. The quarter was the first full quarter of Apple's reduced price strategy on the Sport model, which slightly helped the company rebound from its post-holiday slump.
 
Garmin's vertical integration and constant expansion of the Connect IQ app store have allowed the company to expand its channel presence slowly and gain consumer mindshare. While it remains focused on fitness enthusiasts and athletes, the latest design of the Fenix Chronos will certainly help broaden its appeal to the masses.
 
This is the first time Lifesense has broken into the top five on the strength of by its low-cost Mambo fitness trackers shipping into China. It also connects with WeChat, a popular messaging service in China, to share data with others without having to log into a separate application.
 
Farasha, a San Francisco based company, has launched a crowdfunding campaign for Sowatch, a sports and health smartwatch that not only tracks athletic performance but also helps prevent overtraining and injuries and monitor cardiovascular conditions.
 
Sowatch claims to be the first smartwatch to track blood pressure, cholesterol and glycaemia, among other factors, to help users track their cardiovascular health. Founder Yassir Belhaj came up with the idea in 2012 while his father was recuperating from a stroke. Belhaj frequently travels between the USA and France, and needed a way to help keep track of his father’s health.
 
“The idea for Sowatch has been evolving since 2012,” said Belhaj. “We wanted to make something that was portable, autonomous and useful for people from all walks of life. We wanted to create a watch that could not only track your steps or remind you of your medication, but also give you a more complete picture of your health and give the user better indicators to prevent stroke and heart attacks.”
 
Sowatch doesn’t only monitor health but it is also designed to prevent overtraining and injuries. The watch has a customisable workout feature, which allows users to prepare their workout and share it with friends.
 
“As a triathlete myself, I have competed in some ironman competitions and there’s a lot of sacrifice and hard preparation for these,” said Belhaj. “I’ve had several people test out the Sowatch to optimise their recovery and detect overtraining symptoms, and they were really surprised at how well the watch complemented their training.”