Unpacked: Smart Watch Ownership US/UK as of Q2 2016

Time for an update on the smart watch market.

Our Q2 2016 data is in and among the data set is smart watch ownership at large and by brand. It has been interesting to watch how fast (or not so fast) the smartwatch category is growing. It is growing but only roughly 1.2-1.3% each quarter of net new additions to the smart watch owner family. It is clear this is still largely an early adopter or health/fitness-focused consumer who is still driving the market forward. With ownership in these two countries hovering around the 10-11% of the market, it is safe to assume the smart watch has not yet gone mass market.

With just shy of 11% of consumers in our US and UK panel saying they currently own a smart watch, my estimate puts the total smart watch installed base at 38.4 million units approximately in the US and UK markets combined. When we look at ownership by model, it should come as no surprise Apple is the market share leader with 51% of all smartwatch owners in the US and UK saying they own an Apple Watch. Based on my model, that puts Apple’s Watch installed base at 19m units in just the US and UK. Both of these represent significant sales of Apple Watches from a market perspective.

Samsung came in at a healthy number two with 33% share of the smart watch installed base in the US and UK market. The next closest vendor at number three was LG with 4%.

The mix should not surprise anyone as it is quite similar to the duopoly Apple and Samsung have in smartphones in both the US and the UK. This also aligns with the lack of maturity in smart watches today. Consumers will buy from the brands they trust, who have proven themselves, like Apple and Samsung.

Getting the Smart Watch Mainstream

Looking at the wearable space broadly, I get asked the question of how smart watches go mainstream. I suppose there are still two sides to this debate. Those who don’t believe a smart watch is a mass market product and those who do. I’m personally still convinced smart watches will go mainstream but how far into the mainstream they go is still a big question. I certainly see smart watches hitting 20% penetration in many markets (20% of a market is what many of us consider the tipping point for mainstreaming an innovation). Whether it gets to 50% of a market is a still a debate. I can actually see the combined smart watch and smart fitness band categories getting closer to 50% but I’m not sure how much farther it can penetrate. All of this is to say, I believe there is still plenty of headroom for the category. I’m becoming more convinced this market is like the tablet market in that only a few brands will win. Apple still is the majority share leader in tablet share and I believe that will be the likely case for smart watches as well.

I’m optimistic that version two of the Apple Watch will be a catalyst to lead the charge in smart watches going mainstream. WatchOS 3.0 brings many features that are baseline expectations for the mainstream but I’ll also be watching for Apple to innovate on the hardware of version 2.0, perhaps bringing new designs and new price points. If Apple can get this product into the $200 range then we will see some significant volume upticks.

I’m still optimistic on this space and the value a wearable computer can bring in new data sets and add to the big data sets on ourselves we are amassing with our usage of personal computers. Wrist/ear based sensors can simply capture more unique data than our smartphones and there will be value in translating this learning into health-based insights.

All eyes will be on Apple in September, but I have a hunch 2017 will be the year smart watches go mainstream.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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