2017 proving 'critical' as the smartwatch market finally gets legs, CCS says

Smartwatches are expected to become the top wearables segment in the next few years.

This year is shaping up to be a “critical” for the smartwatch market as high-profile watch vendors rush to join the segment with high-tech wearables, according to CCS Insight. But the Apple Watch will continue to dominate as the space finally begins to get legs.

Legacy watchmakers such as Fossil, Guess, Hugo Boss, Tag Heuer, Movado and Tommy Hilfiger are in various stages of launching smartwatches, helping to boost Android Wear’s market share from 14% last year to 21% in 2017. But the Apple Watch 2, which has exceeded CCS’s expectations to claim more than half of the $7.9 billion smartwatch market this year, will continue to drive the space as 60 million total smartwatches are sold in 2018.

“The Apple Watch Series 2 is clearly a big hit with consumers,” George Jijiashvili said in a CCS announcement released this morning. “The addition of enhanced fitness-tracking capabilities and waterproofing has given it a huge boost. Apple stands head and shoulders above its smartwatch rivals and the much-anticipated introduction of a cellular-enabled version would only propel it to greater heights.”

Apple is expected to introduce the next generation of its smartwatch during a media event in the Bay Area next month.

The smartwatch segment has fallen far short of the expectations of some industry onlookers who predicted early sales could mirror those of smartphones or tablets. Analysts say a lack of compelling apps and use cases are a major problem for the market, which is why simple fitness trackers have dominated their more sophisticated counterparts.

And while some established electronics companies have failed to gain any significant momentum in the smartwatch market, longtime watch vendors have an opportunity in the coming months to claim a stake. That window may begin to close in a year, however, as the foundation is finally laid for steady long-term growth.

“We believe established watch brands using Google’s Android Wear have a much better chance of energizing the smartwatch market than smartphone makers such as Asus, Motorola and Sony, all of which have effectively withdrawn,” Jijiashvili said. “Traditional watchmakers will be relying on their strengths in distribution, retail and branding in the hope of cracking a nut that proved too tough for many of the biggest names in the smartphone world."

“Several established brands are entering the smartwatch market for the first time,” Jijiashvili continued. “If sales don’t live up to expectations and distributors end up with a lot of unsold stock in mid-2018, they may reconsider their involvement in this area.”