Pebble, the first real smartwatch the world — and yours truly — got used to, has shut shop, selling most of its know-how to wearable technology leader Fitbit. While reports of this sellout had been doing the rounds for some time, it is surprising that this has happened. Pebble had a good set of products with loyal customers.
But what has happened to Pebble and earlier Nike Fuel seem to reinforce the fact that wearables are a segment for which the time has not really come. In fact, a Gartner survey says the abandonment rate of smartwatches is 29 per cent and fitness trackers 30 per cent. The report said most people do not find them useful and get bored or break the devices.
Gartner’s research director Angela McIntyre says the abandonment rate, which is quite high relative to the usage rate, has become a serious problem for the segment. “To offer a compelling enough value proposition, the uses for wearable devices need to be distinct from what smartphones typically provide. Wearables makers need to engage users with incentives and gamification.”
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She is right. None of the wearables have been able to come out of the shadows of the smartphone. They have all ended up as being replacements or extension of the smartphone, ultimately something that can be abandoned. Pebble devices were more of the latter and it was only towards the final devices that it started adding standalone features like health data.
Since the value proposition is not compelling enough most of the wearable are still considered very niche. So smartwatches are being bought only by early tech adopters, while fitness trackers, which are still a bit more affordable, have found adoption with some mainstream customers too. This could be one of the reasons why the Apple Watch tries to sell itself in the watch segment and not as a wearable, though it is clearly one.
Earlier this year, when Pebble launched in India, Founder and CEO Eric Migicovsky had told me how their idea was to create a smartwatch that people could wear on a regular basis. “We created the first modern smartwatch and have defined the gold standard of what a great smartwatch should do,” he said, adding how the Pebble does not replace a phone, just complements it.
But its USP of long battery life and an e-ink display were no longer relevant in a world where you could get much more for almost the same price. And even those better devices were struggling to offer a good use case for the users.
Expect more consolidation in the space. Volume will go to the most affordable, most focused player, one that does just one thing like track steps and heart rate. In smarts bands and watches, clear leaders will emerge who will have a monopolistic run till the next disruptor arrive. But until that happens and someone thinks out of the box, the entire segment will remain niche.