Smartwatch, not working?

Smartwatch, not working?
How many years has it been since there was any innovation in the functionality of a smartwatch?


Recently, Xiaomi and Huawei brought their new smartwatch products in the new launch. Among them, Xiaomi Watch S2 focuses on delicate and fashionable appearance design, and there is not much difference in function from its predecessor. Huawei Watch Buds, on the other hand, tries to combine smart watches with Bluetooth headphones to bring consumers a new scene experience.

Smart watches have been developed for more than a decade now, and the market has long been formed. With the gradual high-end of the products, many mixed brands and products are slowly eliminated, and the market pattern is more stable and clear. However, the smartwatch market has actually fallen into a new development bottleneck. When the health functions such as heart rate/blood oxygen/body temperature detection are all available and the testing accuracy reaches a high level, smartwatches are actually a bit unsure of which direction to develop and fall into another new exploration stage.

In recent years, the growth of the global wearable market has gradually slowed down, and the domestic market has even been on a downhill slope. However, major cell phone brands attach great importance to the development of smart watches and see them as an important part of the smart ecosystem. Therefore, smartwatches must get rid of the current dilemma as soon as possible to have the hope of blossoming into more glory in the future.

The development of smart wearable market is getting more and more sluggish
Recently, market research firm Canalys released the latest data showing that in the third quarter of 2022, the overall shipments of wearable wristbands market in mainland China was 12.1 million units, down 7% year-on-year. Among them, the sports bracelet market has fallen for eight consecutive quarters year-on-year, with shipments of only 3.5 million units this quarter; basic watches also declined by 7.7%, remaining at around 5.1 million units; only smartwatches achieved positive growth of 16.8%, with shipments of 3.4 million units.

In terms of market share of major brands, Huawei ranked first in China with 24% share, followed by Xiaomi's 21.9%, and the shares of Genius, Apple and OPPO were 9.8%, 8.6%% and 4.3% in turn. From the data, the domestic wearable market has been completely dominated by domestic brands, Apple's share fell out of the top three. However, Apple still occupies absolute dominance in the high-end market, especially after the release of the new Apple Watch Ultra, pushing the price of smart watches up to 6,000 yuan, which is temporarily beyond the reach of domestic brands.

Among the domestic brands, Huawei maintains the first position, but its market share is being gradually diluted by other brands. The data of the first quarter of this year shows that the market share of Huawei, Xiaomi, Genius, Apple and Glory is 33%, 17%, 8%, 8% and 5% respectively. Now, OPPO replaced Glory to squeeze into the top five ranks, Huawei's share fell by 9%, while Xiaomi rose by 4.9%. This shows that the market performance of each product this year, it is obvious that Xiaomi and OPPO's will be more popular.

Pulling attention to the global market, global shipments of wearable devices grew 3.4% year-on-year to 49 million units in the third quarter of 2022. Apple still sits firmly in the global No. 1 position, with a market share of 20%, up 37% year-on-year; Samsung ranks second with a 10% share, up 16% year-on-year; Xiaomi ranks third with a 9% share, down 38% year-on-year; Huawei ranks fifth with a 7% share, down 29% year-on-year. If we compare with the data of 2018, the global smartwatch shipments grew 41% year-on-year in that year, with Apple occupying 37% of the share. The global share of Android smartwatches has indeed increased significantly in these years, but the growth of the whole market has become slower and slower, gradually entering a bottleneck.

Apple, as the leader of the smartwatch industry, is the ruler of the high-end market, so Apple Watch has been the first choice of consumers when buying smartwatches. Although Android smartwatches have greater advantages in playability and battery life, they are still inferior to Apple in terms of health management expertise, and some functions are even introduced after Apple. You will find that although smartwatches have been upgraded in recent years, the functions and technologies have not really made much progress, and they cannot bring something that makes people shine. The smartwatch market, or Android smartwatch, has gradually entered a period of sluggish growth.

Sports bracelets seriously threaten the development of watches
We think there are two main reasons why smartwatches are developing more and more slowly. First, the functional experience of watches has fallen into a bottleneck, and the lack of something more meaningful and innovative makes it difficult to continue to attract consumers to buy and replace them; second, the functions and design of smart bracelets are becoming more and more like smart watches, but the price still maintains a large advantage, posing a huge threat to smart watches.

Those who are concerned about the development of smart watches may know better that the functions of smart watches today are almost the same as those two or three years ago. The initial smart watches only supported heart rate, sleep monitoring and sports data recording, and later added blood oxygen saturation monitoring, ECG monitoring, arrhythmia reminder, female menstruation/pregnancy monitoring and other functions one after another. In just a few years, the functions of smart watches have been developing rapidly, and all the functions that people can think of and achieve are stuffed into the watches, making them indispensable health management assistants around everyone.

However, in the past two years, we can't see any more novel functions in smart watches. Even the latest products released this year are just heart rate/blood oxygen/sleep/pressure monitoring, 100+ sports modes, NFC bus access control and offline payment, etc., which were actually available two years ago. The delayed innovation in function and the lack of changes in the design form of the watch have led to a bottleneck in the development of smartwatches and no momentum for continued upward growth. Even though major brands are trying to keep product iterations, they are actually making minor repairs on the basis of the previous generation, such as increasing screen size, extending battery life, improving sensor detection speed or accuracy, etc., and hardly see any particularly big functional upgrades.
After the bottleneck of smart watches, manufacturers began to shift their attention to sports bracelets. Since last year, the screen size of sports bracelets on the market is getting bigger and bigger, Xiaomi bracelet 6 upgraded from 1.1 inches to 1.56 inches in the previous generation, this year's Xiaomi bracelet 7 Pro is upgraded to a square dial design, the screen size is further enhanced to 1.64 inches, the shape is already very close to the mainstream smart watches. Huawei, glory sports bracelet is also in the direction of large screen development, and more powerful, such as heart rate / blood oxygen monitoring, women's health management and other basic support. If there is no very demanding requirements for professionalism and accuracy, sports bracelets are enough to replace smart watches.

Compared to the price of the two, sports bracelets are really much cheaper. Xiaomi Band 7 Pro is priced at 399 yuan, Huawei Band 7 Standard Edition is priced at 269 yuan, while the newly released Xiaomi Watch S2 is sold at 999 yuan and Huawei Watch GT3 starts at 1388 yuan. For the vast majority of consumers, it is clear that sports bracelets are more cost-effective. However, the sports bracelet market should also be saturated, the market demand is no longer as strong as before, even if the product performance is stronger, but the number of people who need to change is still a minority, resulting in a decline in bracelet sales.

What's the next step for smart watches?
Many people had speculated that smartwatches would gradually replace cell phones as the next generation of mobile terminals. From the perspective of the functions currently available in smartwatches, there is indeed a certain possibility. Most of the watches are now pre-installed with independent operating systems, which can be upgraded and third-party apps installed, and support music playback, WeChat message response, NFC bus access control and offline payment. The models that support eSIM card can also make independent calls and navigate independently, so they can be used normally even if they are not connected to cell phones. In a sense, the smartwatch is already considered a streamlined version of a smartphone.

However, there is still a big difference between smart watches and cell phones, the screen size is completely incomparable, and the control experience is also far away. Therefore, it is unlikely that smart watches will replace cell phones in the last decade. Nowadays, watches keep adding many functions that cell phones already have, such as navigation and music playing, and at the same time, they have to ensure their professionalism in health management, which really makes watches appear to be rich and powerful, but the experience of each of them is almost meaningful, and it also causes a big drag on the performance and battery life of watches.

For the future development of smart watches, we have the following two views. The first one is to focus on the direction to strengthen the function of the watch. Many smartwatch products support professional health management functions, and many manufacturers have been drilling in this direction to strengthen, so smartwatches can be developed in the direction of professional medical devices. Apple Apple watch has been approved by the State Drug Administration for medical devices, and Android watch brands can also try to develop in this direction. Through hardware and software upgrades, smart watches are given more professional and accurate body monitoring functions, such as ECG, atrial fibrillation reminder, sleep and breathing monitoring, etc., so that the watches can better serve the users' health instead of having miscellaneous but not precise functions.

Another way of thinking is completely opposite to this, smart watches do not need to build in too many health management functions, but focus on strengthening other intelligent experience, making the watch really a portable phone, which is also exploring the way to replace cell phones in the future. The product can independently make and receive phone calls, reply to SMS/WeChat, etc. It can also be interconnected and controlled with other smart devices, so that the watch can run and use independently even if it is completely detached from the phone, and will not cause trouble to normal life. These two approaches are rather extreme, but they can really enhance the experience of the watch in one aspect.

Nowadays, a large number of functions on the watch are actually not used, and some people bought the watch to get professional health management and sports functions. Another part is for the bunch of intelligent functions on the watch, and most of them want the watch to be used independently of the phone. Since there are two different demands in the market, why not try to subdivide the functions of watches and create two or even more new categories. In this way, smart watches can meet the needs of more consumers and have more professional health management functions, and have a chance to attract more users.

The second idea is to put thought into the shape of the product and play more new tricks with the appearance design. Huawei's two recently launched products have chosen this direction. The Huawei Watch GT Cyber has a removable dial design that allows you to change the case according to your preference, making it highly playable. The Huawei Watch Buds, on the other hand, innovatively combines Bluetooth headphones and a watch, with the ability to remove the headphones by opening the dial for a more innovative design and experience. Both products are subversive to the traditional appearance and give the watch more possibilities. However, as a tasting product, the pricing of both may be a bit more expensive, and we don't know how the market feedback will be. But no matter how to say, it is indeed a major direction of smartwatch development to seek changes in appearance.

Smartwatches have become an important and indispensable device in many people's lives, and the products are accelerating in popularity to provide services to more users. With more and more manufacturers joining in, the share of Android smartwatches in the global market is gradually increasing, and the voice of domestic brands in this field is getting higher and higher. However, in the past two years, the development of smartwatches has really fallen into a large bottleneck, with slow iteration of functions or even stagnation, resulting in slow growth of product sales. To continue to promote the development of the smartwatch market, it is indeed necessary to make more bold exploration and attempts to subvert the functional experience, appearance design and other aspects. Next year, all industries should welcome the recovery and rebound after the epidemic, and the smartwatch market should also grasp the opportunity to push the sales to a new peak.

Post time: Jan-07-2023