Wearable Technology - UK - November 2019 - Executive Summary PDF

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EXECUTIVE SUMMARY WEARABLE TECHNOLOGY UK, NOVEMBER 2019

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WEARABLE TECHNOLOGY - UK - NOVEMBER 2019

THE WEARABLES MARKET IS EXPERIENCING STRONG GROWTH, PARTICULARLY WITH SMART EARBUDS. MORE MANUFACTURERS ARE OFFERING THEIR EARBUD VARIANTS, WHICH IS HELPING TO PUSH THIS INDUSTRY. CONSUMERS ARE ALSO INCREASINGLY INTERESTED IN A VARIETY OF USE CASES FOR WEARABLES. THE NUBIA ALPHA SMARTWATCH IN PARTICULAR HIGHLIGHTS WHERE THE INDUSTRY IS POTENTIALLY GOING, WITH THE FUNCTIONALITY OF A SMARTWATCH REPLICATING A SMARTPHONE. Zach Emmanuel, Consumer Technology Analyst

The market

FIGURE 1: ESTIMATED UNIT SALES OF WRIST-WORN WEARABLE DEVICES, BY PRODUCT CATEGORY, 2016-19

Smartwatches driving strong growth in wrist-worn wearables market Mintel estimates the market for wrist-worn wearables to be £5.13 million, growing 23% compared to the previous year. Smartwatches are the main contributors to this growth, with consumers increasingly interested in the variety of use cases for the products. More manufacturers offering smart earbuds amid growing consumer interest Smart earbuds are gaining significant traction in the wearables industry; in terms of consumer ownership, consumers’ intent to buy and manufacturers offering their versions. The variety of brands and price points are helping to push this aspect of wearables further. Concerns over privacy could hold back sales of new connected wearables Apple’s second-generation AirPods and Amazon’s Echo Buds and Echo Frames all support the companies’ alwayson voice assistants. There have been privacy concerns surrounding these voice assistants and how voice recordings are sent to the companies to be reviewed by a human. While the businesses have attempted to address the concerns, there may be consumers who are still uncomfortable with buying these kinds of smart wearables.

Source: Mintel

Google acquires Fitbit for $2.1 billion In November 2019, Google confirmed it will be acquiring Fitbit in a deal worth $2.1 billion. This deal could suggest the company’s future plans of incorporating smart home control with wearables. Also, in response to potential data privacy concerns, Google has outlined that it will give Fitbit users full control over how their data is collected.

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Companies and brands Amazon unveils Alexa-supported ring and glasses In September 2019, Amazon showcased the Echo Loop and Echo Frames; a smart ring and smart glasses which both support the Alexa voice assistant. At launch, they will only be available to US customers.

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WEARABLE TECHNOLOGY - UK - NOVEMBER 2019

Nubia releases ‘wearable phone’ smartwatch called Nubia Alpha

FIGURE 2: OWNERSHIP OF WEARABLE DEVICES, SEPTEMBER 2018 AND AUGUST 2019

In February 2019, Nubia released a smartwatch which aims to blur the lines between a smartwatch and a smartphone. The Nubia Alpha features a 4-inch screen, 5MP camera and while it may struggle for sales in the short term, the product does present an interesting outlook on where the wearables market could be going in the next several years.

“Which of these technology products do you personally own? Please select all that apply.”

The consumer Growth in all wearables particularly smart earbuds There has been an increase in ownership of all wearable devices, with the most significant jump being in the adoption of smart earbuds. As a result of the increasing popularity of these products, more and more manufacturers are offering their versions. Meanwhile, fitness bands/sports watches continue to be the wearable that consumers are most likely to own.

Base: 2,000 internet users aged 16+ Source: Lightspeed/Mintel

Significant increase in intent to purchase wearables

FIGURE 3: INTENT TO PURCHASE WEARABLES IN NEXT YEAR, SEPTEMBER 2018 AND AUGUST 2019

As well as the ownership of wearables increasing, the intent to buy wearables in the next year has also increased across the board. Following the growth in ownership for smart earbuds, these products have also shown the biggest growth in consumers’ intent to buy.

“Do you intend to purchase any of the following in the next 12 months?”

Base: 2,000 internet users aged 16+ Source: Lightspeed/Mintel

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WEARABLE TECHNOLOGY - UK - NOVEMBER 2019

Interest grows in using wearables for payments, security and IoT Tracking health and wellbeing is still the activity that consumers are most interested in for wearable devices. However, there is increased interest in using them for a variety of functions, such as controlling smart home devices, making contactless payments and monitoring security.

FIGURE 4: FUNCTIONS OF SMART WEARABLES, AUGUST 2019 “What would you be most interested in using a wearable technology device for? Please select up to 5.”

Apple leads smartwatch market The Apple Watch leads the smartwatch market by a clear margin ahead of Samsung, despite the fact that ownership of Apple iPhones is the same as Samsung phones. Apple’s grip on the market is emphasised by the fact that Samsung’s watches work on both iPhones and Android phones, while the Apple Watch only connects via Bluetooth to iPhones.

Base: 2,000 internet users aged 16+ Source: Lightspeed/Mintel

FIGURE 5: BRAND OF SMARTWATCH, AUGUST 2019 “What brand is your…? [Smartwatch]”

Base: 261 internet users aged 16+ who personally own smartwatches Source: Lightspeed/Mintel

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WEARABLE TECHNOLOGY - UK - NOVEMBER 2019

Fitbit dominates sports watches industry

FIGURE 6: BRAND OF FITNESS BANDS/SPORTS WATCHES, AUGUST 2019 “What brand is your…? [Fitness band/sports watch]”

Unsurprisingly, Fitbit is by far the leading manufacturer in the sports watch industry, predominately thanks to the success of its Flex wearables in recent years. It is possible though that the company’s success in this market has affected its performance with smartwatches, with consumers perhaps unaware of its range of smartwatches. Increase in frequency of use of wearables While daily use of wearables is consistent compared to 2018, consumers are now more likely to use them once to twice a week and three to six days a week. Base: 383 internet users aged 16+ who personally own fitness bands/sport watches Source: Lightspeed/Mintel

FIGURE 7: FREQUENCY OF USE OF SMARTWATCH, SPORTS WATCH OR FITNESS TRACKER, SEPTEMBER 2018 AND AUGUST 2019 “How often do you use your smartwatch/fitness band/sports watch? If you have more than one, please answer for the one you use most often.”

Base: (2019) 534 internet users aged 16+ who personally own smartwatches/fitness bands/sports watches; (2018) 486 internet users aged 16+ who personally own smartwatches/fitness bands/sports watches Source: Lightspeed/Mintel

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WEARABLE TECHNOLOGY - UK - NOVEMBER 2019

Social media use on smartwatches rises significantly

FIGURE 8: MOST POPULAR ACTIVITIES ON SMARTWATCH, SEPTEMBER 2018 AND AUGUST 2019

Smartwatch owners are more likely to use their device for an array of functions, such as listening to music, making phone calls, using apps, voice assistants and browsing websites. The biggest increase has come in the use of social media though, rising from 17% usage in 2018 to 30% in 2019.

“Which of the following activities do/did you most often use your smartwatch for? Please rank top 3 activities, with 1 being the activity you most often use it for. NET – Any Rank”

Almost two thirds of smartwatches connected to a network provider The majority of smartwatch owners have a watch connected to a network provider, despite the higher prices and/ or fixed contract price. This highlights that consumers want their smartwatch to have some independence from their smartphone, and the potential long-term interest in a product like the Nubia Alpha. Consumers still see smartwatches as too expensive and less stylish than normal watches Following on from similar results in 2018, the majority of consumers see smartwatches as too expensive and less stylish than regular watches. The opinion that smartwatches are too expensive is likely mainly influenced by the price of the Apple Watch, although there is an array of cheaper alternatives. The opinion that normal watches are more stylish is also perhaps surprising given the number of different styles of Apple Watches in particular.

Base: (2019) 261 internet users aged 16+ who personally own smartwatches; (2018) 211 internet users aged 16+ who personally own smartwatches Source: Lightspeed/Mintel

FIGURE 9: SMARTWATCH CELLULAR CONNECTIVITY, AUGUST 2019 “Can your smartwatch connect directly to a mobile network without being tethered to your smartphone? If you have more than one, please answer for the one you use most often.”

Millennials most likely to value battery life in a smartwatch Some 46% of all consumers see battery life as a smartwatch’s most important feature, increasing to 57% for Millennials. Samsung offers its PowerShare functionality on the latest Galaxy S10, to enable the phones to charge its smartwatch and other compatible devices. If more manufacturers offer this, it will be very appealing to consumers.

Base: 181 internet users aged 16+ who personally own Apple, Samsung or Huawei smartwatches Source: Lightspeed/Mintel

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WEARABLE TECHNOLOGY - UK - NOVEMBER 2019

What we think The wearables market is performing well, with consumers more likely to own a wearable than last year, and intent to buy has increased noticeably. Smart earbuds are making the biggest strides, and more manufacturers are getting involved as a result of the increasing popularity of the device. These companies are also adding increased functionality for earbuds, such as controlling Microsoft Office apps in the case of the Surface Buds or the live translation on the second-generation Pixel Buds (the first Pixel Buds had live translation but were not totally wireless). There is an opportunity to take this functionality one step further by offering an audio-optimised version of an app, which is integrated into the smart earbuds. This app for the earbuds would offer a much deeper range of features than what is available through voice assistants on smart earbuds like Google Assistant or Siri. Ownership of smartwatches is increasing, and consumers are more interested in using the device for an array of activities. While tracking health and fitness continues to be of most interest, there is clear growth in the interest in using wearables as an IoT device. Following on from similar results last year, the majority of consumers do still see smartwatches as too expensive though.

FIGURE 10: OPINIONS ON SMARTWATCH STYLISHNESS, BATTERY LIFE AND COST, AUGUST 2019 “Do you agree or disagree with the following statements?”

Base: 2,000 internet users aged 16+ Source: Lightspeed/Mintel

As a result of this, there is also an opportunity for manufacturers to offer smart functionality, such as controlling smart home devices, on a fitness tracker. It is almost a requirement now for fitness trackers to have some smart capabilities, and usually, it is showing notifications from a connected smartphone. However, offering further smart functionality is likely to appeal to consumers, with these

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trackers being cheaper than smartwatches. This smart functionality would need to be pre-installed on the fitness tracker though, because what separates these devices from the more expensive smartwatches that is smartwatches can download apps after purchase.

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