Smart watches still looking for a raison d’etre

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Smart watches still looking for a raison d’etre

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As more companies try to make a splash with smart watches, the purpose of such a product is still unclear. Could smart watches prove themselves to be more than expensive step counters?

As that question remains unresolved in customers’ minds, the quantity of shipments of smart watches decreased drastically in the global market this year.

According to the International Data Corporation, the number of units that were sold around the world in the third quarter of 2016 was 2.7 million, less than half the amount sold in the same quarter last year, which was 5.6 million. Sales for the final quarter of this year will be an indicator of where the smart watch segment is going.

One main reason for the decline is the poor performance of the Apple Watch, which debuted in February 2015. The Apple Watch was responsible for 70.2 percent of all smart watch sales in the third quarter of 2015.

Its popularity was short-lived, however, with sales peaking at 5.1 million units in the fourth quarter of 2015. In the following quarter, less than half that amount were sold, dropping down to 2.2 million. And in the third quarter of this year, the number halved again to 1.1 million.

Samsung Electronics isn’t doing well in the segment either. Its Gear series didn’t prove to be the big success the company hoped for. Samsung’s high-tech watch took second place in the global market by selling 400,000 units in the third quarter of last year, but that’s as far as it went.

Samsung has even had to give up its second place in the market to Garmin, the U.S. sports gadget brand.

The 170,000 won ($144) Gear Fit2 watches are now being given out free to customers who made pre-reservations for Note7.

“Many people are selling their Gear Fit2s on the second-hand market, and it’s affecting the sales of new products,” said an IT insider.

Why are smart watches struggling so much? Experts point to the lack of uniqueness for the products within the IT market. In other words, they have nothing to make them stand out from existing smart devices.

The key idea was to give notifications to users who were in situations in which they didn’t have their smart phones with them. They got a heads-up on texts or calls that came through.

But smartphones have taken over so many things in life that people carry them everywhere, even to their bedsides, robbing the smart watch of any purpose.

Manufacturers changed their focus to a more specialized set of functions dedicated to health and fitness. The latest models do more than just measure the amount people walk or run, but also check the users’ vital signs such as their heart rate.

But smart bands, which are cheaper versions of smart watches without the communications function, have infiltrated the market. One such example is the Mi Band developed by the Chinese company Xiaomi. At less than $50, the band offers users the time, exercise amount, heart rate, sleeping status and so on.

“Unless smart watches come up with healthcare functions to beat smart bands, then it will be hard for them to prove themselves worthy IT devices,” said Jeong Gu-min, an electronic engineering professor at Kookmin University. “Companies are working on products that could provide medical examination services in connection with major hospitals, but it will probably take some time for that to come in common use.”

Right now, digital watches lack a definite identity, dithering between smart devices and fashion items.

“It is undeniable people consider smart watches to be nothing more than fashion accessories, unlike tablet computers, which have gained popularity by allowing the users to watch high-quality videos and documents that are less visible on the small screens on smartphones,” said Park Min-woo a mobile school professor at the Chungkang College of Cultural Industries. “It’s very likely that watches won’t be able to secure their own markets without proving their convenience, for example by enhancing fintech [financial technology] functions.”

Market analysts expect competition to be particularly fierce in the fourth quarter between Samsung and Apple’s newly launched models.

While Apple released its Apple Watch Series 2 last month, Samsung unveils its Gear S3 in November.

“Considering that early adapters have already used smart watches, it will be hard for the new products to bring about a sensational reaction from users without a totally new function,” said Kim Dong-won, an analyst at Hyundai Securities. “If the companies want smart watches to come in common use, it is essential that they collaborate with fashion brands and appeal to consumers’ sentiments.”


BY LIM MI-JIN [ebusiness@joongang.co.kr]

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