Parks Points

The smartphone replaced the basic cellular phone and has continued to diminish the presence of the land line telephone. So why hasn’t the smart watch had the same effect upon the regular watch market?

In 2015, the release of the Apple Watch ignited the nascent smart watch market. However, as of Q4/16, the smart watch only has a 13% adoption rate among U.S. broadband households, indicating smart watches have yet to move into the mass market. The smart watch market is at a critical juncture, as OEMs in the space need to either demonstrate that it has mass market potential, or realize that the market potential of the product will be limited and choose to refine offerings for a smaller niche market of watch enthusiasts.

As for traditional watches, the smartphone always displaying the time prominently  certainly decreases the need for a separate timepiece, but this factor isn’t anything new for watch manufacturers, as cell phones in the pre-smartphone era also displayed the time. The watch value proposition, for brands as distinct as Timex and Rolex, now has to come from factors other than timekeeping. Since recent Parks Associates research indicates that traditional watch sales have been declining across all price categories, it seems like traditional watch manufacturers are struggling to define the value proposition.

The smart watch has a long way to go before it can be said that it will replace the regular watch. Also, regular watches are likely to pivot towards incorporating smart functionality to adapt to a changing marketplace. The most certain thing about the future of the watch market is that it will be more technologically oriented.

For more insight on smart watches, see 360 View Update: Smart Watch: Purchase Drivers.