Fitbit plans to launch a dedicated wearables app store in 2017, according to comments made by CEO James Park during CES 2017 in Las Vegas.
While few details were divulged, the app store would focus on providing support for health and wellness apps, aimed at businesses and healthcare companies.
The company will likely use Pebble's OS system, which it acquired late last year when it purchased the floundering smartwatch company for $40 million. The announcement supports the theory that Fitbit plans to launch its own smartwatch.
Building an app store is integral for Fitbit if it wants to become a big player in the emerging market:
- It will help build up a community of loyal users and developers. App stores unify and define platforms by providing users and developers with a designated location for apps and helps create a community around the brand. If Fitbit intends to become a significant vendor within the smartwatch market, it will need to curry up a community of users and developers, which could facilitate brand loyalty and recognition.
- It will make Fitbit competitive with rival vendors. Google, Apple, and Samsung already have dedicated smartwatch app stores that host device- and platform-specific apps. Users can download these apps from their phones and move them to their watches. Fitbit will need to offer users and developers a viable alternative to these app stores if it wishes to siphon users.
- It will provide the company with an alternate revenue stream. Service revenues from app stores can provide platforms with consistent revenue streams, besides device purchases. And just as they are for smartphones, app stores will be a critical part of the smartwatch market as revenue generators.
While late to the smartwatch race, Fitbit has the opportunity to grab significant market share. For now, the nascent smartwatch market is controlled by Apple and Android, according to BI Intelligence estimates, accounting for roughly 70% of global device shipments in 2016. However, the overall low adoption thus far means that new entrants still have an opportunity to carve out a fair share from these larger companies. Moreover, as smartwatch vendors, such as Apple, begin gearing more to fitness and well-being, Fitbit's established health and fitness brand could give it an advantage over the rest of the market.
Nevertheless, it will be some time before smartwatch adoption reaches critical mass. It will likely be at least five years before global shipments of smartwatches reach a significant number. Sluggish adoption of the devices over the past 24 months has resulted in a heavy reduction in shipment predictions. BI Intelligence projects that smartwatch shipments will grow at an annualized rate of 18% between 2016 and 2021, reaching 70 million units shipped.
When they first broke onto the scene, smartwatches were touted as the next generation of devices set to transform consumers’ lives. And brands, service providers, and the healthcare segment were ready to capitalize on their “always on” nature, which promised to provide greater insight into consumer habits. But while the market initially grew rapidly, it has begun to cool off, as consumers become impatient with the technology's lack of distinct capabilities, such as LTE connectivity and device-specific apps.
In the next few years, the smartwatch market will likely see the addition of new functionality and increased capabilities, which will see the device shipments grow at an annualized rate of 18% through 2021 to reach 70 million units.
However, smartwatches are reliant on a number of factors in order to generate any sort of meaningful consumer demand. Until such a time, adoption of smartwatches will likely be sluggish, as consumers wait for vendors to produce products that can run independently from their phones and provide more useful functions.
So what does this mean for the device championed as the replacement for the smartphone? Should vendors manage to implement a lower price point, better functionality, and expanded use cases, there is a vast potential for accelerated global growth. Moreover, because of the low adoption rate thus far, there is still ample opportunity for new entrants to join the market, and capture mind share.
Laurie Beaver, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smartwatches that examines all areas of the smartwatch market, including a five-year forecast, key growth trends, market leaders, consumer demand, and more. It also discusses the need for the inclusion of standalone capabilities in smartwatches, as well as the importance of bringing both better apps to the devices and greater consumer awareness of capabilities. Lastly, it explores the nascent smartwatch app market, including its shortcomings and how it can be improved.
Here are some of the key takeaways from the report:
- Demand for smartwatches has cooled as consumers wait for better functionality. But early demand suggests the market could take off when functionality improves.
- Apple will continue to drive a large portion of the overall market, however, Android Wear devices will quickly catch up as emerging markets begin to adopt the technology.
- Health and fitness remain a dominant segment of the smartwatch market, providing healthcare workers and hospitals with savings opportunities. As technology and app development advances, the benefits of smartwatches within these segments will become even more robust.
- The future of the smartwatch market remains somewhat unclear, however, there is profound opportunity for businesses and developers to begin exploring the nascent smartwatch market. This will give them a head start against competitors.
In full, the report:
- Forecasts smartwatch shipments through 2021 for both overall device shipments as well as by operating system.
- Provides an overview of the main players in both hardware and software, and how they will size up in the future.
- Demonstrates the effect of Apple’s entrance into the market, and why it's unlikely to dictate future growth.
- Gives insight into what technologies need to be worked on in order to incentivize future growth, the effects they will have on the market, and how they can be used.
- And much more.
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