As I look at the market for smartwatches today, it often seems as though I’m looking at two different realities. The first is where the market is for smartwatches today. Meaning what the data I have says about why people are buying them, what they do with them, what they like and don’t like, and much more. As I study this data, I’m not convinced the behaviours we are observing and acquiring data on represents where this market is headed. On the other hand, I spend a lot of time analysing the future for this category but have no data to justify my convictions of where the smartwatch market may be in 3-5 years. Since we have a great deal of data on what the market drivers and core value propositions are today, it’s easy to say these are the things consumers care about today but much harder to say these are what consumers will care about tomorrow. But it does also help me look at products now and have a good sense of what is going to sell and what isn’t based on our behavioural data. And I can tell you, with deep conviction, this Tag Android smartwatch is not it.
While I think Android smartwatches have potential and a role to play, I’m not sure the luxury watch brands have the audience for an Android smartwatch today. Those who buy luxury smartwatches are doing so for the brand, prestige, and things unrelated to the technology benefits of a smartwatch. This is not to suggest that market does not eventually convert to smarter watches but, as of now, those are not the customers buying smartwatches.
While this Tag Smartwatch looks fantastic and is hopefully the benchmark by which all other Android smartwatch vendors strive for, it carries with it some fundamental issues that will challenge many watch brands regarding their decision to bet on Android Wear.
First, and especially in this case, it is safe to assume most of Tag’s prospective buyers for a $1500 watch would be iPhone/iOS owners. After all, they’ve been shown to favor “premium” products. While it seems there are elements to Android Wear which work on iOS, if you want to install any of the third party apps to your smartwatch from the Android Wear store, you need to be on the Android ecosystem. There may be a way you can do this from the browser version of the Play Store but I’ll need to clarify that. In either case, not an elegant solution for your more premium/luxury customers.
Second, beyond the watch faces, not much is customizable for Tag to differentiate their Android solution from anyone else. While their brand alone may command a premium (and this may hold true if other luxury watch brands ship Android Wear-based smartwatches), it is unclear how strong that will hold up against other brands who ship essentially the same product at much lower prices. Leveraging the differentiators will be more difficult as luxury watch brands ship smartwatches based on Android Wear. But again, the dynamic may play out similar to analog watches where the only differentiator is one watch face and the brand’s marquee. How Android Wear works or does not work with iOS will be a key factor for luxury watch brands to address.
All of this feels like a sign of the times around this smart watch category. Apple shipped 7m Apple Watches since launch and they are on pace to acquire 50% of the Swiss/luxury smartwatch sales in 2015 — despite being on sale for only eight months of the year. Next year, they will easily surpass Swiss/luxury watch sales. When you move that kind of volume, others will not sit idly by and watch. However, the rush to compete with Apple will create a lot of awkward products — par for the course when you are where we are in a new category.
I’m still optimistic in my prediction that 100% of all watches under a $1000 price tag will be smart within 3-4 years and, eventually, all watches will have intelligent components to them. But we will have some awkward years between now and then.