Smartwatches occupied the spotlight at this year’s Consumer Electronics Show, with several brands rolling out new devices. However, demand has yet to catch up to the hype. Only 13% of consumers plan to buy smartwatches this year, an annual increase of just one percentage point. After Fitbit released its first color smartwatch yesterday, the company’s shares plunged by more than 18%.
The disappointing launch points to the steep competition that new wearables face from Apple, which has already established itself as the world’s top luxury brand. To succeed in the connected watch space, brands need to offer their own take on wearable luxury.
Watchmakers such as Montblanc, Movado and TAG Heuer have done just that, rolling out a flurry of smartwatches in the past year that promise both the prestige of a luxury watch and the functionality of an Apple product. The latter even took on the tech company directly, claiming that the TAG Heuer Connected has “almost the same features” as the Apple Watch and livestreaming the product release in the same way that Apple broadcasts its own much-anticipated launches.
Even non-luxury brands are focusing more on crafting a prestigious image. For example, Huawei recently began selling Swarovski-encrusted devices aimed at women, and Misfit has also partnered with Swarovski to turn out slimmer wearables like the slender Ray. Misfit owner Fossil will release more than 100 wearable technology devices this year, a significant increase from 2015.
These moves look bold given what appears to be weak demand. Yet L2 research suggests that innovative luxury brands can succeed in the crowded connected watch space. “Introducing the TAG Heuer Connected” was the fourth most-viewed video on YouTube in L2’s Digital IQ Index: Watches & Jewelry – proving that connected watches are capable of commanding more attention than many of their traditional rivals. However, it remains to be seen whether that increased attention will translate into sales.