Still don't own a smartwatch? You're not alone

This time last year, tech companies were busy hyping what they hoped to be the next big thing in consumer tech.

Apple had just unveiled the Apple Watch. Samsung was promoting the Gear S2. LG, Lenovo and Huawei, amongst others, had partnered with Google to launch new smartwatches of their own, powered by software called Android Wear.

But today, it's clear that smartwatches haven't caught on with consumers quite as fast as tech companies had hoped.

So far, "there's not a great use case for a smartwatch," said Jitesh Ubrani, a senior research analyst with market intelligence firm IDC, who studies mobile technology. "A lot of what these devices can do, they're essentially just mimicking the phone."

Disappointing results

The challenges have taken a toll on some of the competitors. Pebble, an early entrant to the smartwatch game, announced this week the sale of its software assets to the fitness tech company Fitbit, which has been working on a smartwatch of its own. Pebble said the company would be dissolved.

Last week, Lenovo Moto told The Verge it has no immediate plans to make another Android-powered smartwatch — this, after Google announced at the end of September it would be delaying the next version of its Android Wear smartwatch software until early next year for further fine-tuning.

In fact, few new Android smartwatches have been released this year.

And, of course, there's Apple, which released a second generation model of its Apple Watch in September — during the same quarter in which IDC reported both Apple and Lenovo's year-over-year shipments had suffered a significant decline.

Urbani says more consolidation is likely, and other companies will exit the market altogether, drawing parallels to what happened in the past with some tablet and smartphone makers.

"What's atypical, so to speak, is just how early it happened in the market," Urbani said. "The wearables market is fairly young."

Going solo

One big challenge for smartwatches is they typically require a smartphone connection to function — something that Google, Samsung and Apple are all attempting to address with their next generation models.

LG, for example, released the first Android Wear smartwatch that could connect to a cellular network — no smartphone required — earlier this year. Google, meanwhile, is also working on a new Android Wear App Store that can be accessed directly from the watch, so users won't need a smartphone to download and install apps.

Similarly, both Apple's second generation Apple Watch and Samsung's Gear S3 now include GPS so the devices don't need to be connected to a smartphone when used during activities such as running or biking.

Apple's AirPods — wireless Bluetooth headphones — can also connect directly to the Apple Watch so users don't need their smartphone to listen to music that's been synced to the watch.

"On the consumer side of things, the market is really going to pick up and take off when the vendors start to separate the phone from the watch," Urbani said. "And that's starting to happen."

A lot of what these devices can do, they're essentially just mimicking the phone.- Jitesh Ubrani, senior research analyst at IDC

A Gartner survey released this week found 29 per cent of respondents had abandoned their smartwatches "because people do not find them useful, they get bored of them or they break."

The respondents complained about unappealing hardware design, limited capabilities and features that merely replicate what smartphones can do.

Price is another issue, with most smartwatches costing as much if not more than a high-end smartphone on a two-year contract from a wireless carrier.

Year-over-year decline

The IDC report released earlier this week said Apple Watch shipments to retailers were down 71% year-over-year in the third quarter, at which point the company's newest model had only been on the market for two weeks. IDC attributed the decline to an "aging lineup and an unintuitive user interface."

In response, Apple CEO Tim Cook told Reuters this week that "sales growth is off the charts," but didn't directly address the decline in shipments highlighted in IDC's report. 

"In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product's history," Cook continued. "And as we expected, we're on track for the best quarter ever for Apple Watch."

The fourth quarter will be the first full quarter for shipments of the new model Apple Watch, which should offer better insight into how the product is performing.

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