Are Smartwatches Ready for their iPod Moment?

As the industry waits for the launch of the Apple Watch, and eager consumers flex their pre-ordering fingers, we decided to take a look at the smartwatch market, based on the purchases by Slice Intelligence’s panel of more than 2 million online shoppers. With an average market penetration of 5.7 percent of online shoppers in 2014, the smartwatch market was not unlike the MP3 market before the launch of the iPod, when the market for portable digital music players was niche, with only $80 million in sales (according to the Consumer Electronics Association) and Apple made only computers. This growth potential, combined with the fact that the demographic profile of smartwatch buyers closely resembles the total online shopping population, the Apple Watch looks primed to mainstream the smartwatch like its cousin, the iPod, made portable digital music players a common household item.

Pebble Rocks the Smartwatch World – But Motorola Is Gaining Momentum

With 47 percent market share, first-mover Pebble is the market leader, followed by Samsung at 22 percent.


Market Share - Watches
Online purchases of smartwatches, by brand, from July 2013-February 2015  
Source: Slice Intelligence, copyright 2015

However, Motorola, which launched its Moto 360 in September, is quickly gaining momentum, and is taking a big bite out of the first-mover’s market share, finally overtaking Pebble, and all other major brands, in February. This would indicate that price is not an issue for smartwatch buyers—the Moto 360 is the most expensive of the top brands, commanding an average price of $267—a steep premium, considering the average price paid for a Pebble is $142. The least expensive models, from Sony, average $128, and are also the least popular, with only 8 percent market share.

Smartwatch purchasers, by brand.  Source: Slice Intelligence, copyright 2015
Online smartwatch purchases, by brand.
Source: Slice Intelligence, copyright 2015


Watching from the Wings

Apple customers seem to be holding out for the Apple Watch. Only 1.5 percent of people who previously bought an Apple product purchased a smartwatch, compared with 4.6 percent of those who previously purchased a Samsung mobile device. That, paired with the overall growth in the immature smartwatch sector, would indicate that Apple’s timing to define a new category—like it did with the iPod– looks very good.

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