Alex Vargo
Mr. Reuter
Economics
October 6 2015
October 6 2015
Smartwatches
Technology is everywhere. It’s, in our pockets, our sports, and even our refrigerators. But what about our watches? Something many of us carry every day. What if we stuck a little computer inside of one? That’s what a smartwatch is. A little computer on your wrist that has hit the market by storm.
Why have they suddenly become so popular? A product that has been introduced for over 7 years, and suddenly consumers just can’t get enough of them. Such a spike in popularity must mean that we will see everyone wearing one, right? Well, not necessarily.
When a sample of consumers were asked if they would be purchasing a smartwatch within the next 5 years, only about 6% said that it would be “extremely likely” for them to purchase one, while about 38% of the sample said that it would be “not at all likely”.
Price isn’t even the leading factor in the unlikelihood of a purchase. In another survey, only about 14% of consumers say that price is the leading factor in their dislike of smartwatches. The largest reason, with 51% popularity, was that people didn’t see a point in a smartwatch that operated just like their phone. The marginal benefit of getting another piece of technology very similar to that of a smartphone did not outweigh the large marginal cost.
In the end, the high prices of a smartwatch that operates very similarly to that of the common smartphone is all up to what is optimal and worth it to the consumer. For some, the watch may be a helpful tool in their daily lives. While for others, it may just be an expensive toy that is just a status symbol for those who are much more well off. In the coming years, the whole market could change.
Sources:
Danova, Tony. "Apple Watch Will Control Nearly Half Of The Entire Smartwatch Market By 2017." Business Insider. Business Insider, Inc, 07 Jan. 2015. Web. 06 Oct. 2015.
"By 4 to 1, Early Adopters Pick Wearable Watches Over Glasses." Jessica Lessin. N.p., 05 Nov. 2013. Web. 06 Oct. 2015.
"Will Smartwatches Be a Hit?" WSJ. N.p., n.d. Web. 06 Oct. 2015.
You brought up a good pint earlier about how smart watches have been around for years now, but they are only gaining popularity now. Part of this is the company that's selling them. Apple is a kingpin in the technology industry, and has loyal users that will buy and promote any and all of their products, no matter if they are worth the money or not. And since Apple can make money off it, other companies will try to do the same by creating their smart watches, thus increasing the market substantially. Of course once someone buys something nice or expensive, human nature is to do the same. But who knows, maybe someday smart watches could take over the smart phone industry because of their size and convenience.
ReplyDeleteI would have to agree to the majority in saying that smart watches although they are kind of cool we already have all the technology they have in our phones and I don't think the marginal benefit is even close to being worth it, when looking at the fact they do not benefit you any more then having a phone, that can tell time as well.
ReplyDeleteI would have to agree to the majority in saying that smart watches although they are kind of cool we already have all the technology they have in our phones and I don't think the marginal benefit is even close to being worth it, when looking at the fact they do not benefit you any more then having a phone, that can tell time as well.
ReplyDeleteIt is true that for some parts, price really isn't that much of an issue. It's all about the need. 'Since I have a smartphone, I don't need another one in a mini form', this kind of thinking poses as one of many major factors in the market. Make something that no one HAS but NEEDS. In order to supply something there would have to be a demand for it in the first place.
ReplyDeleteWow, it is interesting to see how much people are willing to pay for these nifty watches. because they are so expensive we do not see as many people with them, this I believe that this could be an example of the income effect. Because the price of this good is so high, the demand for the watches themselves is lower. That being said, it does not mean that people dont want them, I want it, it just means that people the cost outweighing the benefits of the small computer watch.
ReplyDeleteI would be in the same boat as the people saying "it's too expensive" and "there's no point". Why buy a smart watch when you have all of that and even more right on your phone? It's a waste of money for both the consumer and producer in my opinion, the marginal benefit for what you are paying is not worth having all of the same features on a smaller screen.
ReplyDeleteI agree that a lot of people have these smart watches just to boost their status; they want them so that they can be the ones with the newest, most expensive technology. Personally, I don't see the point in these watches because they're basically the same as my phone, except it's tinier, and you wear it on your wrist instead. Why waste money on something new when you already have something extremely similar? Some of these watches are just as much as a cell phone, so if these companies really want their watches to sell, they should probably knock the price down.
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ReplyDeleteThe reason they are getting popular is because of Apple. Apple is the most expensive brand in the world and is worth more than Switzerland. When Apple releases something it causes a global trend, everyone wants one. When one person buys this new watch everyone will because of competition. Everyone competes with everyone else for the newest and best things, this competition drives people to buy new things that they don't necessarily need or even want. They do it to show they are better than the people around them.
ReplyDeleteI can see why many people don't feel the need to buy this product. Why would someone pay hundreds of dollars on a watch when they own a phone that can complete the same tasks and operations? The apple watch in particular is kind of bulky and definitely is not a fashion statement. Unless, you're a business man/woman that lives in a huge city and travels a lot I couldn't see the purpose for someone wasting their money on a product like a smartwatch. Sellers of this product claim that using a smartwatch would make a lot of things easier for you such as making calls. However, many of the people that have tried out this product have said that it sometimes is harder to make calls and get things done compared to using their smartphone.
ReplyDeleteVery interesting topic, I myself have done some research on smartwatches, as I want to buy one, and I would say that I do not agree with most of the comments made about smartwatches. I believe it could be a very helpful tool, as it does everything your phone does, I know many people like the things their phone does but may be a little too bulky to carry around in their pockets or bags. And while most smartwatches, like Apple, still require your phone to have full functionality, there are some that can function on their own, rendering people’s phones obsolete, which some people see as a plus. Likewise I don’t believe a smartwatch is used as a status symbol, seeing as just about anyone with a smartphone can buy one, only adding about $10 to their monthly bill, while the initial price of an Apple smartwatch is pricey, there are other, much cheaper, options out there. Good topic.
ReplyDeleteThis is an interesting check of validity with the new technology that is the Smartwatch and I though that you brought up an interesting point that it may not be needed by the consumer. However, I think that the way that you showed how the majority didn't want one is somewhat lacking. Yes, there are charts showing how "not likely" someone will buy the product in the next 5 years, but 5 years is a very long time in perspective of buying something. People often change their minds. You also didn't mention just how much a Smartwatch costs which is kind of an important factor seeing how only 8% said that the price was an issue. This was a good post, I just think that a little more information was needed.
ReplyDeleteIt's interesting that smartwatches have been available for almost a decade, but only now people are starting to buy more of them. I agree that high prices of the watch and smartphones that people already own are some opportunity costs that people will consider before purchasing the watches. Another reason for a shift in demand is because of the trends and advertising today versus when smartwatches first went on the market. Watches have had a resurgence in popularity recently -- not just smartwatches, but classic analog wristwatches and athletic tracking watches as well. The brand of the watch also determines how popular it becomes; Apple recently created smartwatches, and theirs are advertised more often than other watches. There are many factors that go into the success of a product that cannot be controlled, and it may not be the cost or quality, but the demand of the consumers.
ReplyDeleteI agree with you saying there is no point to smartwatches. The creation of smartwatches was completely pointless because it is just like a phone, except you can do less on a watch. I also don't see why people would want to buy an expensive smart phone, and an even more expensive watch that allows you to do less than what the phone does.
ReplyDeleteI never thought the smartwatch would do very good in the market when it first came out. I believed, like, 51% of people that it was useless and acted like a phone. I already have a smart phone so why would I pay more to have two? I personally don't think it is a good investment and I can see that many people shared that opinion a long with me. I wonder how this affected Apple's economics. Did they predict there was going to be more sales than there was? Did they lose money because they created the technology to create these products but it ended up being a dead beat? Did the price of the smartwatch go down after the companies realized people weren't buying it? I believe they will eventually fall out of the market and people won't have them anymore. I don't think people believe the watch is beneficial and you need a product to be beneficial to make money.
ReplyDeleteI think this is interesting because more and more people do not use watches anymore because they can just pull out there cell phone and check the time. But with this new invention people may lean towards wearing one again. As cool as they are are I don't think they are going to do well, because they do what most of what a smart phones can do maybe even a little less, and most of us already have a smartphone. Also a lot of the watches need to connect to your smartphones so you'll be carrying around phone anyways. Really they just seem like a convenience because you don't have to pull out your phone, but is that convenience really worth hundreds of dollars.
ReplyDeleteIt is shocking to me that technology has improved so much that smart watches are now available to anyone and could possibly become an everyday item individuals wear/use. It is crazy that smart watches have been around for almost a decade, but no one really knew much about them until now. The reason they are just becoming known is because Apple is the most popular technology industry, where millions of people use their products. If Apple is selling new products and making a profit, other businesses will compete and try to do the same, making the product and market of smart watches known. Although we already have IPhones and other smart phones which can do the same thing, maybe the market of these watches will flourish as more and more individuals try them out and realize they prefer smart watches over a smart phone.
ReplyDeleteI never new that the watch has been afford for so many years, but now with all the trends only now people are staring to demand them. They are very expensive put there are people who are willing to purchase them so they will keep making them. They seem pretty useless but they are being sold so they are not going to stop production. It's crzy how much extra people will pay for a brand.
ReplyDeleteExcuse my spelling....
DeleteI agree that having a smart watch is just a status symbol. It's the exact same thing as a phone just smaller and on your wrist. I don't think it's a good product to buy it's more of a waste of money. They have been around for a while and they are just starting to blow up now. The advertising for these watches has become more and more popular which is why all of a sudden more and more people are going out and getting these watches which is creating a higher demand for them. We hear more about the apple watch because it's more of a common brand of technology. These more well known brands is creating the more frequently seen advertising.
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ReplyDeleteIt was surprising to see that so many people weren’t so interested to buy a smartwatch within the next 5 years. Today, I don’t see many people wearing them, but I thought as they advance more and make improvements, more people will be willing to buy them. However, when I work, I sometimes see people pay with their watch, which is pretty interesting, but other than that I don’t see people out in public playing their watches as much as they do with their phones. And I don’t believe this will become too popular later in the future, since phones are constantly improving every year which drives people more towards the new phone than a watch. Since phones has been out longer than smart watches, phones will have an advantage almost every time.
ReplyDeleteAlex, Have Smartwatches really been around for 7 years? Wow, I didn’t know that. In some says, I have to disagree with what people are saying. I feel like if I got a cheap deal on a smart watch through amazon, I would buy it just to play with it, but I do agree with a majority of the people. I wouldn’t pay a lot of money for a watch that I probably wouldn’t wear.
ReplyDeleteIt makes sense that the majority of people don't see the point in smart watches because they aren't marking the end of smartphones. Both smartphone and smartwatch technology will advance together and both do essentially the same things so it's not like some new eclipsing technology, it's more of a shiny expensive phone accessory.
ReplyDeleteThis is an example of a company trying to innovate and create a new idea and gain new costumers from it. In the process of trying to make something new they did not generate something the consumers were interested it. Combined with the high price of the product it creates a small market for the product.
ReplyDeleteThese advances in technology are possible because of a competitive free market economy. In a country where consumers have the choice of what to buy, and producers the choice of what to produce, the ingenuity of today’s inventors and entrepreneurs is astounding; who would have thought, just a decade or two ago, that computer-like functions would be readily available at your wrist? However, today we see consumers that are eager for the next big innovation before it is even ready. Does this increasing influx of new technology actually satisfy our desires? Or can we apply similar principles as those of decreasing marginal utility? With each new iphone update, for example, people’s awe seems to become less and less, whereas it used to be that the new iphone release was the talk of the town for weeks.
ReplyDeleteI find the topic of the new Apple Watch very interesting. The other day on the news they were talking about how Apple was predicted to sell many more watches than consumers ended up wanting. At first I would've assumed that the lack of sales was due to the price, but the bigger problem seems to be the concept behind it. I think producers of smart watches are missing the point behind the use of a watch. The typical use of a watch is a thing of the past, now we can reach in our pocket and pull out our phones to check the time. Watches are mainly used for fashion purposes or as mentioned before, as a status symbol. So why are fitness watches such as the FitBit becoming so popular? The answer is that they serve a different purpose. They are more of an invention than an innovation to a standard watch and they are much less bulky. In most cases new technology is extremely beneficial but the smart watch is definitely a case where it's better to just go without.
ReplyDeleteApple Watches will continue to interest consumers because they are new technology. It is obvious that Americans love having the latest technology at their fingertips because millions of people buy a new iPhone every year when the latest version is released. Apple products have not only become functional products, but they have set a social standard in society today. Because of the public’s admiration for Apple and positive association with the company, they can increase prices of Apple Watches and make an even greater profit. I agree that not many people may want them now, but not many people bought iPhones either when they were first released seven years ago. Thus as popularity for the wristwear grows, I have no doubt that they will sell just as fast as iPhones today.
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ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThe ingenuity of today’s inventors and entrepreneurs is astounding; who would have thought, just a decade or two ago, that computer-like functions would be readily available at your wrist? However, today we see consumers that are eager for the next big innovation before it is even ready. Does this increasing influx of new technology actually satisfy our desires? Or can we apply similar principles as those of decreasing marginal utility? With each new iphone update, for example, people’s awe seems to become less and less, whereas it used to be that the new iphone release was the talk of the town for weeks. www.smartwatchdigital.com
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