Will Samsung's introduction of Gear S2 boost the smartwatch market?

Global analysts estimate over 25 million smartwatches will be shipped in 2015, but South Korean analysts are not convinced.
Written by Philip Iglauer, Contributor on

Handsets are so last year; 2015 is the battle of the wrists. Dismissed as just a fad in 2014, smartwatches recently made an impressive comeback. But will they last?

Samsung played a surprise teaser of its anticipated round-watch offering, the Gear S2, which will be unveiled at the upcoming IFA tradeshow in September.

In recent times, Garmin launched three different smartwatches, and LG added WebOS to its line along with G Watch and G Watch R.

In July, Strategy Analytics (SA) estimated that 28.1 million smartwatches will be shipped in 2015, 15 million of which will come from Apple alone. Apple has dominated so far this year by devouring Samsung's market share; four out of every five smartwatches are Apple's wrist wearables, SA said. The company itself has remained silent on actual sales.

So they've many products and an optimistic outlook, but is it justified?

Analysts in South Korea are becoming sceptical of statistics tossed easily with a flick of the proverbial wrist.

Statista estimates the total number of smartwatch shipments in 2015 will be 25 million -- 3.1 million fewer than SA's estimation -- but even that is an optimistic figure according to Ha Joon-doo, IT analyst at Shinhan Securities in South Korea.

"In my opinion this number for 2015 will be less than 20 million for the year. It also depends on whether you include health wrist bands in with your smartwatch figure," Ha said, adding that Apple's total shipments for 2015 will likely total less than 10 million.

But why the discrepancies? The numbers can be easily fudged depending on your definition of a "smartwatch". If you draw a Venn diagram for fitness tracking bands and smartwatches, you will find there is a lot of shared space.

Indeed, according to Statista, total shipments of "wearable technology" forecast for 2015 will be 168 million units, although that is including more than just smartwatches.

"I think the smartwatch strategy -- I mean other than Apple Watch -- has really failed," Ha said.

"I can see some people are using it, but the functionality of the Apple Watch isn't adequate even now. Apple Watch is nice as a fashion accessory, but there still isn't any killer app for the device."

A smartwatch is designed to sport a plethora of functions in addition to telling the time. A fitness band is not; it is dedicated to fitness tracking. But nothing is black-and-white; some fitness bands will display the time and pair with a phone to receive notifications. Many smartwatches include health monitoring as one of its functions, and the difference between the two is getting foggier and foggier.

"I still think it is in the development stages right now. People are still testing initial models," said Damon Kim of the international equity division of Shinhan Investment.

"I still think they have more phases to go through for these smartwatch makers. Some of the functions are quite useful, but I am pretty sure both manufacturers and consumers have to study what smartwatches will do to their businesses."

Basically, analysts said the market has yet to really mature. One hiccup is third-party apps, according to one investment expert -- there are few apps available.

"Facebook turned down Apple's proposal to come up with a Facebook app for the Apple Watch. That to me is an indication that the market is still too immature," said David Yang of South Korea-based Shin and Chang Investment Consulting.

Samsung is the second-most marketable device maker after Apple, and a September launch of a new watch may just inject the market with the life it needs. Then again, it could fail and be forgotten among the whole litany of products that we really don't know are selling well or not.

Source: ZDNet.co.kr

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