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The fight for device relevance

Could the practicality of wearables be a boon for future sales?

Wearable devices have generated a devoted user base, but they still lag more mature device categories in overall sales. However, improving product functionality and network connectivity could support the broader market appeal.

As competitors relentlessly pursue development, many consumer electronics makers are jostling to secure their own place in consumers’ minds (and hands).

A key factor determining winners and losers can be how effectively products are integrated with everyday life. The more traction a product has with users, usually the less likely it is that the product will be replaced by a competitor’s offering—or simply forgotten. Based on a recent Deloitte survey, some newer devices on the market might be ready to surpass more versatile, mature products in terms of relevance.

Consumption trends across digital devices: Usage vs. penetration

Using responses from Deloitte’s 2018 global mobile consumer survey, US edition,1 we charted various products based on the relative measure between weekly usage and penetration. As the chart above shows, smartphones remain the most relevant mobile device, recording both high usage and high penetration. However, some might be surprised by how wearables—particularly smartwatches—fit in. They currently enjoy higher weekly usage than large tablets, while fitness bands are used more frequently over the course of a week than small tablets.

Since wearables have been around for less than half as long as tablets, it is understandable that their penetration is lower. But the higher usage (weekly) and, hence, higher perceived relevance (and traction) could be an encouraging sign for category sales in the future. The prospects for smart wearables are boosted by increased commercialization of 5G, further integration of artificial intelligence (AI),2 and improved functionality.3

In 2018, annual sales growth for wearables globally was not as robust as in 2017 (8.2 percent vs. 10.3 percent). However, the segment is expected to achieve double-digit growth beyond 2018, with increasing smartwatch sales driving this trend.4 Wearables are expected to grow by 12.5 percent per year from 2018 to 2022, with smartwatches expanding at a compound annual growth rate (CAGR) of just under 20 percent.5

Notably, for large US telecom companies, connected devices—including wearables—made up more than 75 percent of net customer additions during 2018.6 Over recent reporting periods, major telecom companies indicated that wearables accounted for an increasing number of net customer additions, offsetting customer declines in more mature products such as tablets.7

The next generation of smartwatches is coming with features that could boost their applicability and usefulness for everyday activities, such as stand-alone cellular functions, improved virtual assistant integration, mobile payments, and advanced health tracking.8 This could mean that in the coming years, the wide gap between smartwatch penetration and weekly usage may close significantly.

This charticle authored by David Ciampa on December 19, 2018.

2018 global mobile consumer survey: US edition

A new era in mobile continues

Once again, smartphones are at the center of the connected universe. Our survey revealed that consumer habits—from smartphone and smartwatch adoption and increased use of digital voice assistants to demand for data and anticipation for 5G—continue to dictate telecommunications trends.

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