While smartwatches have been available commercially for several years now, the product category is yet to pick up steam and smartwatches, truth be told, are far from becoming must-have items circa 2016. While the usual suspects, Samsung and Apple, are the two leading names in the industry, the segment itself is having problems transcending its niche and has so far failed miserably at appealing to the mainstream consumer the way smartphones have over the past decade or so. While many in the industry had hoped that Apple releasing its own smartwatch will attract enough attention from the mainstream media to bring the product category into public consciousness, that hope dissipated quickly with many industry insiders like the CEO of Tag Heuer and Hublot, Mr. Jean-Claude Biver, lambasting the Apple Watch for being 'feminine' and dismissed it as a plastic toy designed by student designers.
In spite of mixed reviews, initial sales of the device were said to have been along expected lines, with over 2.3 million units pre-ordered within the first few days of its announcement. However, with the passage of time, sales of the Apple Watch apparently declined considerably if various reports in the media are to be believed. With Android Wear watches also not exactly catching on like wildfire, smartwatches have continued to remain limited in their appeal and are, quite frankly, struggling to shed off their geeky image. In fact Juniper Research, in a recent report, actually summed up the travails of the industry pretty clearly when it described the sector as " a category waiting for a market". With no compelling reason to get rid of the traditional wristwatch, most people are adopting a wait-and-watch policy before putting down hundreds of dollars to get something with limited functionality and even more limited shelf-life.
The question that now arises is a fairly simple one. How much are users willing to pay for the novelty factor now that their appetite for gaming, social media, video chat and texting is whetted by the ubiquitous smartphone that everybody and their aunties seem to carry around these days. While the answer to that question is still up in the air, demand for the smartwatch, especially the one from Apple, has taken a nosedive in recent months with no compelling apps that will force users to make that investment. While all smartwatch makers are struggling to expand the product category, Apple has been hit especially hard as the company had bet big on its watch last year. While Apple has presumably more than recouped its initial investment, the product itself continues to remain little more than a novel toy, and its success - or lack thereof - continues to be a hotly-debated topic.
What’s worse for Apple is that while it was able to sell 10.6 million units of the device in just 8 months last year, KGI Securities seems to believe that less than 7.5 million units of the device will ship this year mainly due to its dwindling popularity. That is a whopping 50% drop from around 1.3 million units per month last year to just about 625,000 units on a monthly basis this year, if those estimates do hold up in the final analysis. According to renowned Apple analyst at KGI, Mr. Ming-Chi Kuo, the lack of widespread uptake for the Apple Watch can be attributed to a number of factors, including the lack of killer apps and an underwhelming form factor. Its lack of compatibility with non-Apple devices is also one of the reasons for its lack of popularity, according to him.
Meanwhile, even as the 2nd-gen Apple Watch is expected to go into production later this year and launch alongside the iPhone 7, Mr. Kuo is not exactly optimistic about its chances in the larger scheme of things. According to him, the model will basically just bring some minor changes from the original device launched last year, so it might not exactly do much to turn things around for the Cupertino, California-based company. However, there is light at the end of the tunnel after all, and Mr. Kuo says he expects demand to pick up once the 3nd-gen Apple Watch is launched next year with more compelling apps, better connectivity and a new design that will make it look more like an actual wristwatch and perform more like a standalone, connected gadget replete with unique applications. It remains to be seen if that will indeed happen, but many electronics and technology companies around the world will be hoping that it does, as that might just kick start an entire industry desperately seeking a killer product.