The number of smartwatch shipments in 2020 will be 9% lower than in 2019, due to delays in production caused by Covid-19 according to GlobalData estimates. Smartwatch revenues will also decline in 2020, as the global recession resulting from the pandemic hits consumer spending. Smartwatches could have a role to play in tackling Covid-19. Some vendors are adding apps that remind people to wash their hands frequently, while others are supporting research tracking the spread of the disease.

Listed below are the key macroeconomic trends impacting the smartwatches industry, as identified by GlobalData.

Covid-19

Covid-19 has hit the smartwatch industry on both the supply and demand sides. We expect smartwatch shipments to decline in 2020, due to disruptions in production stemming from the lockdown in China at the start of the year. We also expect consumer spending on nonessential products, which include smartwatches, to fall as the world moves towards recession. However, smartwatches could play a role in tackling Covid-19.

Most devices are capable of measuring and recording a variety of health metrics, such as body temperature, heart rate, and blood pressure, and also have GPS positioning technology. Smartwatches could also be used for contact tracing, potentially reducing the impact of quarantine breaches.

Health and fitness

Access to health and fitness information and the ability to monitor vital metrics are key selling points for smartwatches in the consumer market. Incumbent vendors like Apple, Samsung, and Fitbit, along with new entrants like Huami and Oppo, are also highlighting the capabilities of their devices to healthcare providers. Data gathered by smartwatches can be used to facilitate predictive care, early diagnosis, and remote patient monitoring. However, concerns over the accuracy of this data, combined with the general lack of an effective medical record infrastructure, represent obstacles to swift progress.

GlobalData expects that the applications of smartwatches in healthcare will increase over the next five years, driven by improvements in sensors and software, and growing consumer adoption.

Kids’ smartwatches

The popularity of kids’ smartwatches is on the rise, driven by parents’ desire to monitor their children remotely. Imoo, VTech, Huawei, Tencent, Aberdeen, and Xiaomi are active players in this area, offering smartwatches with built-in GPS, 4G, parent-child navigation, and SOS buttons. Fitbit’s 4G-powered, Alexa-enabled kids’ smartwatch is scheduled to be launched in 2020, and Apple is expected to include child-friendly features on its upcoming Apple Watch Series 6.

This growing market also represents an opportunity for telecom service providers to add connections. Verizon, Vodafone, T-Mobile, and China Mobile all have kids’ smartwatches in their portfolios. Despite the growing popularity and investment, smartwatches for children will remain a niche market, stifled by concerns about cyberattacks and the potential psychological impact on children.

Product differentiation

For companies entering the smartwatch sector, or seeking to grow their market share, differentiating their devices from those already available is both difficult and expensive. Some early entrants relied on aesthetics to stand out, but most now embrace the established model. For example, Apple Watch’s rectangular face with curved edges and Fossil’s circular style have become standard designs in the market. Any difference in services is also eroding, as most devices feature a similar set of components.

Vendors appear to be struggling at the development level as well. The Apple Watch Series 5 differed from the Series 4 only in terms of processor, minor aesthetic modifications, and software features like the Always On display. This could be an indication that the existing sensors and software capabilities are reaching their limits. The limited onboard space of smartwatches also inhibits the addition of more components, resulting in minor incremental changes in new models.

This is an edited extract from the Smartwatches – Thematic Research report produced by GlobalData Thematic Research.

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