The Wearable Device Market is Going to Explode, What Should Brands Do About it?

apple-watch-greenEven though smartphones have yet to reach peak adoption rate among consumers, the market for wearable electronic devices are expanding rapidly and brands are faced with having to deal with yet another communications channel that requires close understanding and adaptation.

Right now, smartwatches in Indonesia are the domain of health enthusiasts according to Hiro Whardana, CEO and co-founder of CodeInc, a digital consultancy company. The primary reason to get one right now, he said is to track performance during sports activities, but eventually it’s going to reach the mass market.

“Sports and health are the trend right now but it’s probably difficult to get people to get used to smartwatches that rely heavily on smartphone battery life”, Hiro said. “However, people are going to buy the Apple Watch anyway even if it’s just for show”, referring to the upcoming watch that Apple launched earlier this week in San Francisco.

According to research firm GfK, global consumers in 2015 will purchase 51 million wearable devices, which includes smartwatches and health fitness trackers. In the emerging Asia Pacific region, the company predicts that smartwatches will outsell health and fitness trackers by 3.5 times.

Dr Jan Wassmann, Global Product Manager for Wearables at GfK, said, “many consumers are not yet aware of the additional benefits a smartwatch has to offer. We believe this will now change, driven by the marketing efforts of the industry this year”.

This is a major reason why the company is forecasting an increase in global sales of wearable electronic devices from 17.6 million in 2014 to 51 million this year. The decreasing cost of purchasing a smartwatch and its expanding list of functions make it a far more attractive proposition than the standard health and fitness armbands.

Currently fitness armbands are more popular than smartwatches but the company projects global armband growth to be completely outperformed by the smartwatch given those considerations, pushing smartwatches to 26.1 million units sold this year from 4 million last year, while armbands will “only” grow from 13.5 million to 25 million units sold.

Asia Pacific’s emerging markets, which includes Southeast Asia, is expected to see 1.4 million smartwatches and 400,000 fitness trackers sold this year according to GfK.

As Hiro implied, GfK’s research found that 56% of people surveyed are far more likely to purchase a smartwatch if these devices can be decoupled from the smartphone. Having an embedded SIM card will allow these devices access to the data network independent of the smartphone, freeing them from reliance of the relatively short smartphone battery life.

Whether the use of a SIM card will actually shorten the battery life of the smartwatch itself is a matter for another discussion. Currently these devices connect wirelessly to the smartphone through Bluetooth and WiFi channels.

Ario Tamat, CEO of digital activation platform thinks it’s going to be a while before brands take a stab at smartwatch marketing because even today, they haven’t fully grasped the idea of mobile marketing.

“I would say that brands have yet to properly tap in to mobile and app ecosystem, aside from what they’re doing for specific campaigns (i.e branded games), let alone smartwatches. Not that it is a sign of incapability of the brands (or their agencies), but more to the fact that developing a proper app and maintaining it becomes a lot of hassle for something that is not core business”, Ario said.

For Ramya Prajna, co-founder and CEO of Think.Web digital agency, the key to enter the smartwatch field lies with the software developers. “The gate for brands to enter the smartwatch are apps. Apps are built by developers. The problem is developers in Indonesia create something based on whether they have the knowledge or not, not on the problem to be solved”, he said.

In other words, don’t expect local software developers to jump on the smartwatch bandwagon so soon.

“Since smartwatches would become very personal experiences, I see it becoming a part of branded concierge services with ties to CRM (customer relationship management) efforts”, Ario added.

This is evident from what Apple demoed on stage at the Apple Watch event with Starwood Hotels allowing guests to use their Apple Watches to unlock doors and essentially acting as their identifiers.

Music identifying app Shazam told AdWeek earlier this month that the company is expanding beyond music and it’s going to be able to identify television or radio advertising and deliver additional content for consumers through its app. “So if you Shazam an ad, you can get an interactive tour of the car, schedule a visit with a dealership, sign up for a test drive and really have a second-screen experience after the 30-second ad finishes”, said Rich Riley, Shazam’s chief marketing officer.

The challenging part at this stage is determining where to go with regards to smartwach platforms. It’s easy to assume that the Apple and Android platform will prevail based on smartphone adoption rates but Ramya argues that whichever one requires the least interaction will win out. “More interaction means higher barrier”, he said.

Ario added “it’s tough enough to persuade people to install a branded app, it will be even tougher to guess what smartwatches they use or even, which platform will have enough critical mass to make sense for usage outside of publicity stunts”.

Essentially, a wise step to take for now seems to be to wait, or perhaps run limited experiments, until wearables have become more ubiquitous.