Fueled by Apple Watch, smartwatch prices surge as basic activity trackers tumble

Posted:
in Apple Watch edited June 2016
Though prices on activity trackers continue to drop, average selling prices on wearable devices still saw a major increase in the first quarter of 2016, boosted in large part by the availability of the premium-priced Apple Watch, according to new research.




Futuresource Consulting's newly published global wearables report found that the average price of wearable devices grew 50 percent year over year, to $218, as demand outpaced supply. That price growth was enough to offset falling prices on basic activity trackers, which continue to represent the majority of wearable device sales.

In all, with growing sales of both cheaper fitness trackers and premium smartwatches, worldwide revenue from retail sales of connected wearable devices grew by a whopping 133 percent, last quarter to $6 billion.

Playing a key role in industry growth and rising average selling prices was the Apple Watch, which was not yet available to consumers in the first quarter of 2015. That means year-over-year comparisons in Futuresource's latest data have the added benefit of a full quarter of Apple Watch sales in Q1 2016.

In addition, toward the end of the quarter, Apple slashed the price of the Apple Watch by $50, cutting the 38-millimeter Sport model to $299, and the larger 42-millimeter version to $349. Even with those price reductions, Apple still remains well above the market average of $218.

At least in terms of sales figures, activity trackers remained the standout performers when it came to health and fitness wearables, Futuresource said, with volumes increasing 18 percent to 10.7 million units. Sport watches with GPS and heart-rate monitoring using chest straps also grew by 11 percent.




Fitbit and Xiaomi took 70 percent of the volume while Garmin, Polar and Suunto remained the most popular brands in sports watches, used by fitness enthusiasts and endurance athletes.

Tumbling prices and added features propelled the popularity of activity trackers. Average prices for activity trackers items had already dropped 40 percent in 2015 over the previous year.

The drop in prices and growing popularity of smartwatches is reducing the growth of spending on specialized health and fitness wearables -- spending on them grew only 2 percent in 2015, and Futuresource is expecting that low level of growth for fitness trackers to continue in 2016.

To make up for this, vendors are focusing on other aspects of fitness wearables like accessories, apps, new markets and a pivot to the watches and jewelry category.

This has set off a wave of partnerships and acquisitions. Nokia has bought French wearable-health Withings, Fossil acquired Misfit, and Fitbit recently acquired Coin, which will add payment technology to its devices.

Apple now ranks among the largest watchmakers in the world in revenue terms, even though the Apple Watch is falling short of earlier forecasts. It's still behind giants Swatch and Rolex but ahead of Fossil, Citizen, Casio, Richemont, LVMH and other well-known horological heavyweights. It's a stark reminder of Apple's global reach and the way it has redefined market success, in terms of both scale and rate of adoption.

Apple has declined to publicly release sales figures for the Apple Watch, leaving research from firms like Futuresource as the only glimpse into how the company is faring vs. competitors. Rumors have pegged the launch of a second-generation Apple Watch for this fall, potentially alongside a new iPhone.

Comments

  • Reply 1 of 12
    slprescottslprescott Posts: 763member
    I'd be interested to see a report on profit distribution among wearable vendors -- similar to the report showing Apple holding 94% of smartphone industry profits.
    lolliver
  • Reply 2 of 12
    gatorguygatorguy Posts: 23,165member
    I'd be interested to see a report on profit distribution among wearable vendors -- similar to the report showing Apple holding 94% of smartphone industry profits.
    It could only be based on semi-educated guesses as Apple and probably some others don't announce it in the first place. 
  • Reply 3 of 12
    lkrupplkrupp Posts: 9,452member
    Great decision by Apple to hold Watch sales and revenue close to their vest. That leaves the pundits twisting in the wind with no hard data. Left to just making stuff up people no longer trust what they are saying about it. Good idea.
    jbdragonlolliverbrucemc
  • Reply 4 of 12
    Rayz2016Rayz2016 Posts: 6,957member
    lkrupp said:
    Great decision by Apple to hold Watch sales and revenue close to their vest. That leaves the pundits twisting in the wind with no hard data. Left to just making stuff up people no longer trust what they are saying about it. Good idea.
    Any minute now, someone's going to drive by this comment and spray it with groundless speculation.  Something like, "Ha! I'll tell you why they're keeping the figures a secret: because they haven't sold one! NOT A SINGLE DAMN ONE!"

    nolamacguybrucemc
  • Reply 5 of 12
    jungmarkjungmark Posts: 6,866member
    I don't understand. The media has been telling us the watch is a failure.
  • Reply 6 of 12
    jbdragonjbdragon Posts: 2,246member
    jungmark said:
    I don't understand. The media has been telling us the watch is a failure.
    That because Apple won't throw out sales number. So it must be BAD!!! Even though Apple said BEFORE launch they weren't going to release sales numbers.
  • Reply 7 of 12
    maestro64maestro64 Posts: 5,005member
    lkrupp said:
    Great decision by Apple to hold Watch sales and revenue close to their vest. That leaves the pundits twisting in the wind with no hard data. Left to just making stuff up people no longer trust what they are saying about it. Good idea.

    Was just about to say you can not calculate an average selling price without knowing two important numbers, total revenue and total unit sales, neither of which Apple shares and these guys some how came up with a number, this is amazing.
  • Reply 8 of 12
    19831983 Posts: 1,224member
    With the seemingly significant improvement in performance and usability from watchOS 3 together with the Watch2 hopefully set for release this Fall. Apple's wearable might finally become the hit we're all hoping for. I'm certainly much more interested in it than I was before, and if new hardware is introduced, I might finally take the plunge.
    apres587
  • Reply 9 of 12
    LoneStar88LoneStar88 Posts: 319member
    My Sport 42 was one year old as of Fathers Day. I wear it and use it everyday. Very useful and helpful despite its few weaknesses.
    lolliverbrucemc
  • Reply 10 of 12
    kevin keekevin kee Posts: 1,291member
    My SS 38 has been the best wearable product I have ever own. Despite a few minor things that can be improved (mostly my own wishful thinking), Apple Watch system is so stable it has never given a slight error even once in a year I own it. Never crashed, no errors, super reliable. I wear it 18 hours per day, gym in and out, office in and out, on the beach, on the mountain, even kayaking in the river. After one year, it still shines like new but a tiny scratch on the side. I love it, not because it is made close to perfect, but because it is always on my wrist (unlike my other more expensive watch) and I can rely on it 100%.
    brucemc
  • Reply 11 of 12
    chasmchasm Posts: 2,391member
    Smartwatches as a category have not suddenly gotten more expensive; the Apple Watch got a tiny bit cheaper, and this has clearly sparked a spike in sales. That's really the only plausible explanation of the 50 percent jump in the ASP of smartwatches. This ain't rocket science.
  • Reply 12 of 12
    brucemcbrucemc Posts: 1,541member
    kevin kee said:
    My SS 38 has been the best wearable product I have ever own. Despite a few minor things that can be improved (mostly my own wishful thinking), Apple Watch system is so stable it has never given a slight error even once in a year I own it. Never crashed, no errors, super reliable. I wear it 18 hours per day, gym in and out, office in and out, on the beach, on the mountain, even kayaking in the river. After one year, it still shines like new but a tiny scratch on the side. I love it, not because it is made close to perfect, but because it is always on my wrist (unlike my other more expensive watch) and I can rely on it 100%.
    Indeed, I found the AW the best gen1 product I have ever owned, or seen reviewed.  It has needed a reboot 2 times in over a year (think about that for a second - as a tech product!).  I read many pundits claim it is really a gen 0.5 product, but that is looking primarily at its functionality - and really more about it "not having a clear set of uses articulated" like the iPod and iPhone did when they came out.  But for me, as a "tech product", I look at its durability, stability, and functionality it provides to "me", and have found it great.

    Having used it for over a year, there are of course a number of things I would like to see added / improved (mostly in s/w, but some in h/w in new version).  Some they addressed with WatchOS 3 (app launching, better UI layout), but some I hope for in the near future:
    - Option for always on (lower power) watch face (even if only during the day hours).  Maybe with gen2 h/w (better battery and lower power components)?
    - Specific tap when I go out-of-range of iPhone - make sure I don't forget it
    - Many more watch faces, and ability to customize them more (some of this addressed in watchOS 3, but much more to go).  Love the photos watch face, but please let me put complications like temperature, or maybe next meeting, on them.  I default to modular during the work day as it has the info I like to see - lets get some of that on other watch face types
    - Get the Siri latency down substantially.

    If they address the following h/w related items over the next two versions (gen2 and gen3), then I believe Watch will climb to close to 50M units per year in less than 5 years.  The pundits/haters of course will still say it is a fail as it isn't at the iPhone levels, but you can never appease them anyways.
    - Improved water proofing.  Just make it so you can go for a quick swim at pool / beach without fear - having to take it off.  It doesn't have to be a divers watch.
    - GPS.  Just to get the fitness enthusiasts fully on board.
    - Cellular connectivity.  Myself I think only data is required when it is on its own.  Most people carry their phones with them or have them at home. 
    - The better battery life to support the above & (optional) always on watch face

    If they can add smart bands that address a broader variety of health monitoring, then it would really move mainstream.  It would appeal then to not just Apple iPhone users (itself going to be 750M market before too long), but an even broader market.
Sign In or Register to comment.