Smartphones are ‘wearable’ so do we really need anything smart on our wrists?
As Pebble sinks and Fitbit stumbles, the wearable tech market isn’t looking so fit
The Flex, an ‘electronic coach’, device by Fitbit
“There’s 14 billion wrists in the world,” Eric Migicovsky told me a few years ago while explaining his confidence in the future of Pebble, the plucky little smartwatch maker he had founded and built up on the back of successful crowdfunding campaigns.
It was a wry joke, of course, but meant to illustrate the potential market for Pebble and smartwatches. All those wrists, he was essentially saying, represented a lot of untapped real estate that the nascent wearables sector was about to occupy – it looked like Migicovsky had every reason to be confident.
But in the past few years something notable has happened – many of those billions of wrists are still going naked. And the wearables sector is not looking quite like the new frontier of mobile computing it appeared to be back in 2015, when the Apple Watch launched to great fanfare.
Unfortunately for Migicovsky, the story didn’t end in unlikely triumph – Pebble was acquired by activity-tracking pioneer Fitbit in December, for just $40 million, which was less than the company’s debts. Fitbit also picked up Vector, a high-end European smartwatch maker, and was apparently in talks to acquire Jawbone, its vanquished fitness-tracking rival.
It looked like the wearables market was consolidating, with San Francisco-based Fitbit the clear leader in the health and fitness side of things.
But then earlier this week, Fitbit announced disastrous sales for its December quarter, selling 6.5 million units and generating $580 million (€537m) in revenue way below its projected earnings of between $725 million and $750 million. Chief executive James Park announced a cut of 6 per cent of its workforce – more than 100 employees and blamed “softer-than-expected holiday demand for trackers in our most mature markets”.
That’s not a good sign. “Softer-than-expected demand” suggests the market for fitness trackers has been largely saturated, so the sector is relying on the replacement cycle for sales. This brings its own problems with research persistently showing that about a third of users ditch their fitness trackers within a few months of getting one. This suggests fitness trackers are purchased with the same enthusiasm for self-improvement that prompts people to sign up for annual gym memberships, and are cast aside in the same way that people stop going to the gym. The replacement cycle, then, will be smaller than the original market unless these devices get really compelling really fast.
Apple, meanwhile, has had its own struggles with the Apple Watch. The much-hyped gizmo has not been an unqualified success, although it has probably been a better performer than its critics give it credit for. The tech giant doesn’t break out sales figures, but estimates suggest it sold about 10 million of them last year, which is not disastrous.
However, the quiet phasing out of the absurdly overpriced luxury Apple Watch range is probably evidence enough that the focus at Cupertino was not in the right place when conceiving of and designing the signature wearable. Last September’s launch of the Apple Watch Series 2 was effectively a “reboot”, focusing on health and fitness tracking, and the device’s dramatically evolving software and user experience was a clear indication that they released it without really figuring out what it was for.
The wearable sector is a cautionary tale in the risk of extrapolating too optimistically from adoption cycles – with a whole new class of device, it can be hard to tell whether an explosive start is indicative of a massive potential market, or a more limited pool of early adopters that can get saturated quite fast.
For the likes of Fitbit and Pebble, there is the added dilemma of the hardware business – the inexorable threat of commodification. In the most recent quarter, Fitbit’s market share was eaten in to by Xiaomi, and much cheaper Asian knock-offs will inevitably reduce the entry price for fitness trackers dramatically. It would seem only Apple has solved that particular dilemma.
What is clear is that we are not yet at the point where wearable computing goes mainstream, never mind the point at which it is poised to supplant smartphones.
The technology industry is always eager for the next big shift in computing paradigms, always predicting how one platform will be supplanted by another. And sure, we can envisage how a combination of the Apple Watch and Airpods, say, could reduce the need for an iPhone, but that is some way off yet.
It appears to me that the discussion about the slow progress of wearables always seems to miss an obvious point – smartphones might not be worn on the body in the same way as a wristwatch, jewellery or spectacles, but they are in our pockets and handbags. Whether we’re “wearing” the computer on our body or just have it to hand seems a rather unimportant distinction in the larger scheme of things.
For all intents and purposes, smartphones are already “wearables”, and that reality raises the bar for smartwatches in particular – it will be quite a while before any device on our wrist can supersede the smartphone. Until then, we should just let wearables be useful accessories on all those billions of wrists.