This week has been a big one for wearable technology, with the formal announcement Monday of Fitbit’s (FIT) “Ionic” smartwatch, followed by new gadgets from Garmin (GRMN) and Samsung Electronics (005930KS), all of which is being chronicled by Raymond James analyst Tavis McCourt.
Throw into the mix a planned media event by Apple (AAPL) at its new Cupertino space ship campus on September 12th; that event could reveal an update to the Apple Watch, which various outlets have speculated will add stand-alone wireless data to free the watch from dependence on the iPhone.
McCourt, who was bullish earlier this week about Fitbit’s prospects, today reflects on the Garmin and Samsung introductions, which took place at one of the largest annual electronics trade shows, IFA, taking place in Berlin.
His overall point, as with Fitbit, is that there’s plenty of room for all the vendors to take share from traditional watches, especially as Alphabet’s (GOOGL) Google’s “Android Wear” software has failed to ignite sales of the non-Apple smartwatches.
The true available market for non-Chinese vendors is a bit over 50 million units annually, growing y/y, and with meaningful ASP increases as the market moves up from basic activity trackers to smartwatches. The overall watch market remains a 350-400 million unit market with ~100 million of these sold for over $150, so if these smartwatches can continue to take share from traditional watch vendors, there is plenty of room for many to be successful. The strategic opening for all but Apple is that Androidwear devices have been disappointing to date, and so for the vast majority of the world that does not use iPhones, there exists a meaningful opportunity for the time being.
Among the announcements was an update to Samsung’s “Gear” line of smartwatches, the “Gear Sport,” a round-faced watch that comes in either a basic black finish or blue, with a variety of watch faces and wristbands to choose from. Samsung touts various health features of the device, including 60 pre-programmed workouts, and a swim app developed by swimsuit makers Speedo.
Writes McCourt, “We note that Samsung’s wearables, as one would expect, look great, but historically consumer reviews have been tepid due to software performance.”
“Whether Samsung can tackle this hurdle in this lineup remains to be seen.”
Garmin updated some fitness trackers in the “vivo” line, while adding a new model, the “vivosport.” It adds heart-rate tracking to the basic step counting, comes with a built-in GPS radio for measuring distance covered without a smartphone, and tracks the body’s stress.
McCourt’s assessment is that “overall, Garmin continues to move its ‘vivo’ product line upmarket, and is continuing to expand its form factor choices for a market in which most vendors offer only one form factor (usually a square face.)”
Therefore, “A meaningfully lengthened battery life on the Apple Watch 3 would, in our opinion, be a step towards more ubiquitous adoption.”