Devices for the Wrist - Ecosystems Crucial to Growth of Connected Watches and Bands

Following several decades of false starts, wrist-worn technology is becoming an enormous new opportunity: shipments for wrist-worn devices are expected to grow by nearly sevenfold in 2014 and threefold in the following year. Technology developments, high smartphone penetration rates, new applications and the availability of well-designed, easy-to-use devices are some of the key drivers behind this growth. The variety of products available has ballooned, with different designs, capabilities and brands, but the entry of Apple into the market in 2015 will be the key catalyst for growth. Manufacturers face multiple challenges in developing a smart watch that is attractively designed and balances functionality with the right combination of user interfaces. Furthermore, there is an inherent trade-off between functionality and battery life: typically, technology vendors such as Apple and Samsung favor functionality and have had to develop innovative ways in which the user can interact with the device. Traditional watch manufacturers such as Casio and Citizen prioritize battery life and limit functionality. In between are a broad range of different possibilities to meet different needs and tastes. There remains significant potential for product development and improvement, particularly as the chipset and technology suppliers improve their products, with a particular focus on improving battery life. Highly functional smart watches will be dominated by the existing smartphone platforms, but there are also opportunities for devices with lower functionality, particularly for the traditional watch manufacturers, for whom typically design comes above functionality. Fitness and health applications will be a key driver for wearables. Many large technology companies are looking at cloud based health services as an important new revenue opportunity. Bluetooth is the connectivity technology of choice today; Wi-Fi drains batteries quickly but enables independent connectivity and could introduce new opportunities, particularly for mobile operators. We expect that NFC will make the biggest impact, opening the door to new applications, particularly in the areas of access control, loyalty, payments and travel. By 2019, we are projecting shipments to grow by 13-fold from its 2014 level, with more than 10% of the global population wearing a connected wrist-worn device. While the market is expected to be triggered by the Apple Watch, at the same time lower cost devices will also drive the market as chipset and component prices fall; furthermore, the price of connected bands will fall dramatically as new business models become established.

Scope

The “Devices for the Wrist: Ecosystems Crucial to Growth of Connected Watches and Bands” report analyses the wrist-worn wearable device market opportunity, highlighting the key drivers as to why we believe this product category is now ready to develop. It provides a global forecast, based on an analysis of the ecosystem, the products on the market, an industry survey, an end-user panel on top of Pyramid Research’s deep understanding of the mobile communications industry. Our forecasts include only wrist-worn, wireless-connected devices, segmented into watches and bands, plus a segment for cellular connected devices.

The report is structured as follows:

Introduction: Report scope, description of end-user and industry surveys, definitions and market segmentation.

Background and overview: Market overview, end-user awareness and background.

Ecosystem analysis: Ecosystem overview, key elements and participants.

Product analysis: An examination of 70 connected wrist-worn devices including key challenges, segment overviews, user interface, design elements, functionality, battery life, pricing and product positioning.

Forecasts: Global shipments and revenues, with breakdowns by segment; global installed base and penetration.

Reasons to buy

The “Devices for the Wrist: Ecosystems Crucial to Growth of Connected Watches and Bands” report provides a comprehensive examination the nascent wrist-worn wearable technology opportunity to help executives make informed investment decisions, develop effective partnerships and optimize return on investment.

This report provides a five-year forecast of wrist worn wearable volumes and revenues broken down into three segments, namely bands, smartwatches and cellular watches as well as a population penetration and installed base analysis to enable executives assess growth opportunities and position their companies for emerging trends in demand

The report incorporates a detailed product analysis, highlighting the features, functions, pricing and capabilities of over 70 product models on the market, which provides an in-depth overview of key trends in the wrist-worn device market for any stakeholder and should support vendors in developing competitive strategies as well as differentiation.

Survey data is included into the analysis, including both end-user awareness information as well as the results on an online industry survey to assess the industry’s position and expectations of the market opportunity.

Companies mentioned

Apple, Asus, AT&T, Casio, Citizen, EE, Fitbit, Fossil, Garmin, Geak, Google, HTC, Huawei, Jawbone, LG, Limmex, Martian, Microsoft, Motorola, Neptune, Nike, NTT Docomo, O2, Pebble ...

Apple, Asus, AT&T, Casio, Citizen, EE, Fitbit, Fossil, Garmin, Geak, Google, HTC, Huawei, Jawbone, LG, Limmex, Martian, Microsoft, Motorola, Neptune, Nike, NTT Docomo, O2, Pebble, Qualcomm, Richemont, Runtastic, Samsung, Sonostar, Sony, Swisscom, Telefoni

Table of Contents

Introduction

I.Report scope, definitions and segmentation

II.Survey and panel overview

Section 1: Market overview and background

I. Overview of wearables and connected watch ...

Introduction

I.Report scope, definitions and segmentation

II.Survey and panel overview

Section 1: Market overview and background

I. Overview of wearables and connected watch opportunity

II. End-user awareness

III. Industry expectations

IV.Watch market overview

V.Smart watch history

Section 2: Analysis of the smart watch ecosystem

I. Smart watch ecosystem overview, brand positioning and key takeaways

II.Application developers: Positioning strategies

i.Runtastic

V. Traditional watch manufacturers: Positioning strategies

i.Swatch

ii.Casio

VIII.Smart watch platforms/vendors: Positioning strategies

i.Google

ii.Samsung

iii.Apple

XII.Mobile network operators: Positioning strategies

i.AT&T

ii.NTT Docomo

iii.Swisscom

XVI. Chipset and component manufacturers: Positioning strategies

i.MediaTek

Section 3: Assessment of wrist-worn products

I. Key takeaways

II.Product and manufacturer overview

III.Product segmentation and pricing

i.Smart watches

ii.Bands

iii.Cellular-connected smart watches

IV.Product challenges

V.Product analysis

i.User interface

ii.Interactivity and functionality

iii.Android Wear user interface

iv.Design

v.Battery life

vi.Functions and applications

vii.Android Wear applications

VI.Product positioning: Price versus functionality

VII.Product connectivity

i.Wi-Fi

ii.NFC

Section 4: 5-Year forecast of wrist-worn device shipments, revenue and installed base 64

I. Key forecast assumptions

II.Industry survey results: Population penetration expectation for 2019

III.End user awareness

III. Product availability

IV. Wrist-worn device shipments by segment

V. Bands: Shipment and revenue forecast

VI. Cellular smart watch: Shipment & revenue forecast

VII. Smart watches: Shipment and revenue forecast

VIII.Global installed base and penetration forecast

Appendices 75

Companies mentioned

Sources and related research

About Pyramid Research

List of Tables

Product count by segment 10

Overview of survey and panel surveys 11

Survey respondent breakdown by company type 12

Survey respondent breakdown by region 12 ...

Product count by segment 10

Overview of survey and panel surveys 11

Survey respondent breakdown by company type 12

Survey respondent breakdown by region 12

Smartphone penetration in selected markets, ye 2013 14

“Which of the following have you heard of?” 15

“Which of the following wearable technologies have you heard of?” 16

“In five years time, what level of population penetration do you expect to see for wearable connected devices (in your country)? 17

“Please rank the following types of wearable devices in the order of how successful you expect them to be over the next five years” 17

“Is your company involved in the connected wearable device market?” 18

“Which of the following devices are/will be within the scope of your company’s involvement in the connected wearable device market?” 18

Global watch revenue, 2012, 2013 19

Average watch prices by country of manufacture, 2013 19

Early smart watch failures 20

Smart watch ecosystem 22

“In your view, how would strong adoption levels of wearable devices impact the following?” 23

“Please rank the following brands in the order of how successful you expect them to be in wrist-worn wearable devices” 24

Runtastic pro app 27

Positioning of watch vendors and smart watches 29

Swatch Touch 30

Positioning of smartphone manufacturers 33

Cellular-ebled watches and subscription costs 37

AT&T devices (Filip watch, Martian watch, Fitbit Flex) 38

NTT Docomo’s Move Band 2 39

Limmex emergency watches offered by Swisscom 40

Smith Optics I/O Recon connected goggles 40

Apple S1 SIP and Qualcomm TOQ Smartwatch 41

MediaTek LinkIt overview 42

Manufacturer breakdown by type 45

Prices by segment: low, average and high 46

Yingqu InWatch One, Garmin Forerunner, Tomoon Fire 47

Sony Smartband Talk, Jawbone Up24 48

Filip, hereo and Tinitell wristphones for children 49

Samsung Gear Live, Timex Ironman One GPS+ 49

“How important are the following challenges that the industry must overcome to ensure mass market adoption of wearable devices?” 50

“How would you expect the user to interact with connected devices worn on the wrist?” 51

Product positioning: functiolity and user interface 52

Android wear menu and user interface 53

Apple Watch designs 54

Smart watches with classic designs 55

Kairos smart watch has both a classic and a digital screen 55

Watch battery life 56

“How important do you think the following applications will be in driving wearable device adoption?” 57

Early Android wear applications by category 58

Product positioning 59

Wearable connectivity capability 60

“Please rate the importance of the following ways in which wearable devices connect” 61

Telefonica’s TU Go service 62

Apple Pay on an Apple Watch 63

Starwood Hotel watch app 64

Connected wrist-worn device shipments, 2013-2019 65

“In five years time, what level of population penetration do you expect to see for wearable connected devices (in your country)? 66

“Which of the following new technologies have you heard of?” 67

“Which of the following statements do you consider to best represent wearable technology in 2014?” 67

Bands, cellular smart watches and smart watches launched 2012-2014 68

Segment market shares, millions of shipped units, 2013-2019 69

Connected band shipments and revenue, 2013-2019 70

Cellular smart watch shipments and revenue, 2013-2019 71

Smart watch shipments and revenue, 2013-2019 72

Wrist-worn device installed base and population penetration, 2013-2019 73

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