Industry Voices—Jijiashvili: 2017 a 'make or break year' for Android smartwatches

Android Wear 2.0 smartwatches
Android Wear smartwatches have yet to gain mass-market traction. (Google)

Since the initial launch in 2014, Android Wear smartwatches have so far struggled to appeal beyond technology enthusiasts. Major smartphone makers initially eagerly committed to Android Wear. However, following disappointing sales some of them, including Asus, Motorola (Lenovo) and Sony have eased back from the category.

In contrast, Apple has proved that while the smartwatch market is considerably smaller than the smartphone market, it has potential and steady growth is possible. Since releasing its first-generation smartwatch in 2015, the company most recently stated that in the first quarter of 2017, it had set an all-time revenue record for the Apple Watch.

According to CCS Insight’s estimates, Apple shipped just under 10 million units in 2016. With the estimated 3 million Apple Watches sold in the latest quarter and the expected release of a new generation Apple Watch later this year, the company is likely to deliver another record year for the product category.

Every year, CCS Insight conducts an end-user survey focused on various technologies including wearables. In our most recent survey, we set out it identify some of the shortcomings of Android Wear from a user’s perspective. When we asked Android Wear smartwatch owners in the U.S. what they disliked most about their devices, 43% of them cited battery life as by far the biggest concern. Other concerns included the companion smartphone app (35%), the design and look of the smartwatch (29%) and the [limited] number of available apps (29%).

The good news is that when it comes to design, there have been dramatic improvements. We’ve seen a shift from square, bulky, black plastic smartwatch designs to round, more refined watch-like designs featuring premium materials such as steel and glass. However, the issues around software persist.

At its annual I/O developer conference in 2016, Google announced the Android Wear 2.0 update. At the time, it was dubbed the "most significant Android Wear update" and it was positioned as an update that would turn Android Wear’s fortunes around and broaden its appeal.

A key development was allowing the ability to download apps on to the watch that could be used in a standalone mode. Furthermore, Google added support for LTE connectivity, upgraded fitness features and improvements to user interface.

Over one year later, these updates are only starting to roll out. Unfortunately, though, the update has not really been the groundbreaking revamp many were hoping for. It has certainly brought plenty of incremental and necessary updates to the platform but that alone is not enough.

This does not bode well for Android Wear, particularly given that 2017 is shaping up to be a pivotal year for smartwatches and in particular for Android Wear. Consumer electronics brands such as Huawei, LG, Samsung and ZTE have been joined by widely recognized fashion and watch brands. By our estimates, over 10 new Android Wear powered smartwatches will arrive later this year from fashion and watch brands, including Fossil, Guess, Montblanc, Movado and Tag Heuer.

This flurry of new products, which will doubtless be accompanied by extensive marketing, will raise consumer awareness of full-touch smartwatches significantly, but if what it delivers disappoints, it could set the wearables market back significantly. This could result in a nightmare scenario of a huge inventory of unsold Android Wear devices being stuck in the channel in the first half of 2018.

On this basis, we think that Google needs to act fast and keep the upgrades to Android Wear coming quickly. A good place to start would be improving the compatibility with iOS devices. For most consumers, a watch purchase is primarily about how the device looks. A good proportion of those consumers will likely own an iPhone—particularly in North America.

Google also needs to start thinking more about the needs of real users and fixing core issues like battery life and usability. Getting the basics right is essential.

We still contend that wrist-worn technology has tremendous potential. Beyond smartwatches, child trackers are proving to be an enormous pocket of growth and the advent of LTE Cat M1 networks should help the entire category expand functionality without further compromising battery life.

Apple Watch has shown there is a market but true success will only come when the technology is accessible enough and useful enough for mass market consumers to consider making the investment to embrace it.

George Jijiashvili is a wearables analyst at CCS Insight. Based in London, he leads CCS Insight’s research in the wearables and VR market and has co-developed company’s research service for these areas. He provides regular commentary to leading news organizations such as Forbes, the Financial Times and The Economist. You can follow him on Twitter @george_ccs.