Ever since the days of comic book detective Dick Tracy and his two-way wrist watch, wearable technology has held a fascination for consumers. So the potential of the next generation of smartwatch technology, which is set to go well beyond communications and into data applications, could be a real winner. But, as our latest global study* shows, many consumers have yet to be convinced of the attractions of the devices’ advanced functionality.
Based on the 5,000 surveyed smartphone owners in China, Germany, South Korea, the UK and the US, the overall conclusion is that, as far as consumers are concerned, smartwatches aren’t yet living up to their name, with a widespread perception that they are just activity trackers that tell the time. But a closer look reveals a more uneven picture, with different countries at different levels of interest in using smartwatches to connect to what is being called the ‘Internet of Things’.
Healthcare leads the way
Nearly half of those surveyed across all the five countries would be interested in using a smartwatch to provide doctors or hospitals with their personal healthcare data. However, there are notable differences according to country:
- In China 69% said they were interested in this application, compared to 50% in the US and 43% in South Korea.
- Europeans are more hesitant: just a third in the UK and a quarter in Germany replied positively.
Travel via public transport is another fruitful area for brands to explore in extolling the virtues of smartwatches, with over 45% of consumers across the five countries generally happy to use a smartwatch as a public transport ticket or travel card. Again, the Chinese seem most amenable, with 63% keen on the idea, followed by well over half in South Korea and just over 40% in the US. The Europeans are less comfortable, with under a third in both the UK and Germany responding favorably.
Online security is top of mind at a time of growing cybercrime, so it is perhaps unsurprising that, overall, 45% of respondents agree that they would use the device as secure identification to log onto personal computers or to access online accounts. Significantly, interest in this function increases with age, starting at 42% of those aged 16-29, rising to 46% of 30-49 year-olds and 48% of the over-50s.
Taking a more detailed look on a country-by-country basis shows that:
- Over two-thirds on the Chinese would like this application.
- In the US the figure is just under half.
- South Korea follows at 37%, the UK at 33% and Germany at 25%.
When it comes to having a smartwatch acting as a wireless identity card, while an average of 38% said they would use it when going abroad or dealing with the authorities, that jumps to almost 60% in China. Other countries are not as convinced, with the comparative figures of 41% (the US), 33% (South Korea), 28% (the UK) and 20% (Germany).
With mobile payments yet to reach mainstream adoption (for example, in September 2014 only 2% of UK consumers made an in-store payment using a mobile or tablet**), encouraging consumers to use smartwatches as a method of payment in the near future could be a significant challenge. According to the research, only 35% replied positively, despite the promised convenience. In terms of individual countries, China, as with the other applications, leads the pack: 54% of respondents were in favor. The US is the next most promising market with 40%, but only 28% in South Korea and 27% in the UK. Yet again, the Germans’ reluctance to engage with these sorts of devices stands out: only a fifth would be interested in using a smartwatch to make payments.
The lesson for brands
While there seems to be considerable untapped potential in the market for wearable devices, brands need to take a sophisticated approach, considering the broader context such as the role of the smartwatch in the Internet of Things. Successful strategies will be those which are carefully geared to the consumer level of understanding and acceptance market-by-market.
For example, in countries where consumers are more comfortable using the devices’ functionality, especially China, brand differentiation will play a critical role in consumer decision-making. In others, such as Germany, education will have to be the driving force in persuading consumers that smartwatches are both secure and can make their lives easier.
Timing is – ironically – a crucial aspect, as consumers’ expectations might not evolve as quickly as the technology. They’re also often hampered by a limited understanding of what can be complex offers which they might simply reject if their expectations are not aligned with promises of the products and service they get. For smartwatches, the good news is that there are lots of levers to be pulled and stories to be told. However, hitting those right notes at the right time remains a huge challenge, with players needing to move on from a trial-and-error approach that has yet to pay off.
*Study conducted in August 2014 surveying 5,000 smartphone owners in China, Germany, South Korea, the UK and the US. Download the full report.
**UK data from GfK’s financial research survey (FRS), September 2014
We’ve also planned a multi-client research study exploring how to raise consumer interest in smartwatches. Learn more about the project and how you can take part.
Anselme Laubier is Account Manager at GfK’s media and technology division. He can be reached at Anselme.firstname.lastname@example.org