Popular Smartwatches Selling But Profit Margins Stall
If Baselworld 2017 told us anything this year, it’s that Swiss manufacturers want to get in on the smartwatch revolution. This is a demonstration of where the watch business is today, popular smartwatches are starting to sell. It isn’t just the Apple Watch which is popular with customers anymore – Pebble, Fitbit and LG all have a wide range of different smartwatches which are exciting customers.
However, despite the smartwatch industry booming, there is an underlying problem that manufacturers are having. Despite large sales numbers, profit margins are not where manufacturers would like them to be.
A Wide Range of Popular Smartwatches
There are a wide range of different types of smartwatches available on the market today. There are fully functional smart devices like the Apple Watch and Google’s new exciting Android Wear 2.0 devices. These devices are like having a computer on your wrist, letting you surf the internet, check emails and even download and utilise apps. These were expected to be the most popular smartwatches on the market but it hasn’t quite worked out the way they expected.
The Apple Watch 2 picked up on the big trend towards fitness wearables and started to move towards the fitness tracking features. This device borrowed from the likes of Fitbit, with features like activity measurements and sleep tracking which have become incredibly popular. The Swiss Horological Smartwatches produced by Mondaine, Alpina and Frédérique Constant combine traditional Swiss style with the up to date smart features. The likes of Garmin and Polar have a more up to date sports style which has caught the imagination of fitness fanatics. There’s no doubt that these popular smartwatches have helped to inspire smartwatch manufacturers and fitness fanatics alike.
There are also more traditional watches with connected features like those produced by the likes of Guess. The Guess Connect collection of smartwatches look like traditional smartwatches but they connect to your smartphone and have a wide range of connected features. These are certainly exciting for lovers of stylish watches and smart technology alike. This style of smartwatch has proved incredibly popular with customers.
Manufacturers Worry About Profit Margins
While all of this exciting new technology is selling well with customers, watchmakers have some big concerns. This is because there are new challenges for watchmakers who are used to the way that the fashion industry works. Watchmakers are used to producing a new collection twice a year with large profit margins. The world of technology moves very quickly, but the cost of profit margins on smartwatches have turned out to be a lot smaller than watchmakers have become accustomed to.
A spokesman for the Movado Group told WatchPro, “In the consumer electronics world, the pace of change is much faster and margins are lower. That is the way the world is. If you want to operate in that world, you have to accept that.” This indicates that watchmakers are coming to terms with the fact that they are going to have to work with the norms of the electronics industry rather than the fashion industry. Movado have announced an exciting range of what are sure to be incredibly popular smartwatches.
Movado have decided that they are going to work with Google by incorporating their Android Wear 2.0 platform. This exciting Movado Connect smartwatch collection are set to go on sale in autumn with a starting price of £325. While Movado accept that profit margins are not going to be as high as standard wristwatches, the longer cycle of availability of consumer electronics allows manufacturers to make large profits in the long run. It remains to be seen if watch manufacturers can adapt to this way of working – Movado will certainly be hoping they can.