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Gartner :Smart Watches Will Not Dominate the Holiday Season

Published: Nov 28,2013

Despite the hype surrounding smart watches, they are unlikely to be featured on many consumers' holiday wish lists this year, according to Gartner, Inc. Gartner said that premium pricing paired with an unclear value proposition will steer consumers' spending toward tablets and fitness bands, leading to lackluster sales of smart watches this holiday season.

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Smart watches are a product subset of the wearable electronics market that caters to different industry verticals and consumer groups that include fitness, health-monitoring, monitoring the elderly and law enforcement (tracking).

Smart watches themselves are not a new device but they have recently evolved from the health and fitness field with an attempt to enter the mainstream consumer market by adding communication and more smart features.

"Samsung and other well-known vendors have recently entered the smart watch space, yet the products we have seen so far have been rather uninspiring in terms of design, available apps and features," said Annette Zimmermann, principal research analyst at Gartner.

"As a result, Gartner predicts that wearable devices will remain a companion to mobile phones at least through 2017, with less than one percent of premium phone users opting to replace their phone with a combination of a wearable device and a tablet."

There is currently a wide spectrum of technical specifications and capabilities in current smart watch products, such as the availability and speed of processors, display technology, type of sensors, connectivity and operating systems. There are models that could potentially replace a smartphone entirely — as they include all technologies down to cellular connectivity, while others can perform message display, initiate voice calls and music streaming.

"The convenience aspect of using a watch for interaction while leaving the larger-screen phone or tablet in the bag or pocket is something that users can relate to and probably recognize its value," said Ms. Zimmermann.

"However, there are still several significant barriers to mainstream adoption, including low interest and awareness among consumers, poor design and price."

Currently, due to lack of innovative design, most smart watches have not achieved mass-market appeal. The majority of products that have been designed or launched so far have displays that many consumers will find "unstylish" due to their bulkiness.

"Users expect more than just more convenience from a new product category that claims to be innovative and priced at $200 to $300," said Ms. Zimmermann.

"The same price will fund basic tablets with a good feature set. For the coming holiday season users are more likely to pick the basic tablet option rather than a smart watch as the value proposition is clearer."

Furthermore, providers must realize that the success of smart watches will not be decided by hardware alone; apps and interoperability across devices will be a key differentiator that will bring brand loyalty and customer engagement to those vendors investing resources in fostering the developer community.

"Interoperability and stand-alone apps give the smart watch more value on its own — that is when it is not connected to a smartphone," said Angela McIntyre, research director at Gartner.

"Even though smart watches play a 'supporting role' to smartphones, designing the smart watch only to act as a secondary device will consign it to failure. Sensors, such as accelerometers, gyroscope, infrared, microphones and cameras, will give software developers greater flexibility to create apps for a broad range of usages."

Ms. McIntyre said that interoperability between the smart watch and devices other than the smartphone or tablet would enhance their usefulness and bring new capabilities to wearers.

Some smart watches include the ability to pair directly with a Bluetooth headset to keep calls private and prevent music from being overheard by those nearby. Smart watches may connect directly with Wi-Fi access points, which would enable wearers to access the Internet, send messages and make calls via voice over Internet Protocol (VoIP), independent of the smartphone.

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