On Thursday, analysts at International Strategy & Investment Group LLC released an industry report on smartwatches. At the same time, analysts at the firm upgraded shares of Fossil Group Inc (NASDAQ: FOSL) to a buy rating.
Senior Managing Director Omar Saad stated: “Not only do we believe smartwatches represent essentially no threat to the traditional watch industry, but smartwatches as a new consumer category could be a significant disappointment in our view.”
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Saad outlined seven reasons why smartwatches reduce value to consumers:
- Reduces flexibility; smartwatches prevent multitasking by occupying both hands during use.
- Uncomfortable to use; smartwatches require the user to hold their arm in awkward positions for extended periods of use.
- Visually unattractive compared to style of traditional watches.
- Underwhelming point of sale; smartwatches lack the “wow factor” compared to the vibrant and bold look of other mobile devices.
- Athletic/fitness is best chance for success, but wrist is arbitrary; health, fitness, and vital signs can be monitored from many other areas of the body.
- Samsung's disappointment is not a good sign; Samsung has sold only ~1.2 million Galaxy Gear watches despite having a 400 million-smartphone user base.
- Other negatives; small screen difficult to navigate, short battery life and not a stand alone product; must be synced with phone.
Ultimately, Saad finds that smartwatches detract more value from consumers than they add.
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