As we saw in the Fall 2024 Wearables Ownership Report, smartwatch growth has declined, dropping to 40 percent of the US adult population from its previous high of 42 percent. But sales are increasing which reflects a healthy base of smartwatch owners who are actively using the watch and who are entering their replacement cycle. Indeed, unlike smartphones, which are stretching the replacement cycle to between three and four years, we see that most smartwatch wearers are looking to replace their devices somewhere between one and three years.
Part of that is driven by hardware issues such as battery degradation, but it is also a sign of innovation (subtle though it may seem with some iterations of devices) that is helping to persuade consumers to head back to the store in search of a new device. Churn also remains relatively low at 13% - a slight improvement since the Spring.
But – and there is always a but – there’s a challenge for the smartwatch manufacturers. The smartwatch is seen first and foremost as a health, wellness and fitness device. Perhaps that is fine and that is the category that the smartwatch should play in. But if that is the case, then 40 percent of the US adult population is probably close to tapping out the market.
We are not suggesting that the smartwatch can take on all the features and functions of a smartphone, but there are subtle enhancements that would significantly improve the device, particularly in a cellular, standalone variant. Take messaging, for example: most third part messaging apps (WhatsApp, Telegram, Teams – especially Teams if you want to make the smartwatch more useful in a business environment! – and more) do not have native apps for the smartwatch. That means that while a consumer may see a message come in, replying is difficult (and starting a new conversation almost impossible). For consumers who rely on these messaging apps, that means always having your smartphone with you, which limits interest and demand in a cellular-only variant, and further again limits the smartwatch to being a fitness device, rather than a productivity device.
Another key, and obvious, area of improvement is tighter integration with the smart home. For example, keyless entry into the home is far easier via a smartwatch than from having to pull your phone out of your bag or pocket. And yet it is this kind of ease-of-use application that is rarely highlighted. Admittedly, customer demand for these features relatively low, but 16 percent of smartwatch owners say they use the watch to interact with their smart home daily – and that increases to 23 percent for a cellular-connected watch.
Expansion of smartwatch features is increasingly important not just in order to grow the owner base, but also because the smartwatch is starting to face competition with increasing interest in smart rings. If, indeed, the smartwatch is primarily perceived to be a health and fitness device only, then a smart ring can replicate the same tracking.