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TheMobileBuzz
Wearables not yet must-have multipurpose tools
five vendors driving the wearables market in the second
quarter of 2016 were Fitbit Inc., Xiaomi Inc., Apple Inc.,
Garmin Ltd. and LifeSense Group B.V.
W earable devices for tracking fitness progress As wearable device manufacturers seek differentiation
have become popular, yet payment using through integration of such features as payment and
the devices continues to lag. Forecasters two-way communications, the attraction for consumers
predict that will change as consumers begin who prefer to pack light when mobile could prove to be a
to shift to smartwatch payments as a matter of conve- further boon to the industry.
nience. According to IHS Inc., the number of wearable
devices with payment functionality is projected to reach Intelligent devices in pipeline
150 million units globally in 2020, up from 10 million in
circulation in 2015. Fitbit, whose name has become synonymous with the
fitness tracking side of wearable devices, recognized the
Recent data from the International Data Corp. published value of expanding into payments. It acquired intellectual
in the Worldwide Quarterly Wearable Device Tracker revealed property specific to Silicon Valley-based Coin's wearables
that growth in wearable device shipments in the second payment platform in May 2016. The investment will enable
quarter of 2016 was up 26.1 percent year-over-year at 22.5 Fitbit to integrate near field communication functionality
million units shipped. The IDC tracker also confirmed in future devices, the company noted.
that access to payments was not the top priority for
wearable device enthusiasts. "Coin has been one of the key innovators in advanced
payment solutions," said James Park, Fitbit co-founder and
"Fitness is the low-hanging fruit for wearables," said Jitesh Chief Executive Officer. "The inclusion of their payment
Ubrani, Senior Research Analyst for IDC Mobile Device technology into our offerings will further our strategy of
Trackers. "However, the market is evolving, and we're making Fitbit products an indispensable part of people's
starting to see consumers adopt new functionality, such as lives."
communication and mobile payments, while enterprises
warm to wearables' productivity potential." San Francisco-based startup Fit Pay Inc., led by former Cy-
berSource and Visa Inc. executives, developed the Trusted
Basic versus smart wearables Payment Manager, a payment-enablement platform de-
vised to allow wearable device manufacturers to seam-
While the overall wearables market saw second quarter lessly integrate contactless near field communication pay-
gains, the trajectory for the two categories IDC tracked ment capabilities into their products.
traveled in opposite directions. Basic wearables (devices
that do not support third-party applications) grew 48.8 In September, Samsung Electronics Co. Ltd. released the
percent compared with levels for the second quarter of Gear S3 smartwatch. Users in select markets can now
2015; smart wearables (devices that support third-party register credit cards and make purchases via smartwatch
applications) declined 27.2 percent over the same period, most anywhere Samsung Pay smartphone payments are
IDC noted. accepted. Also in September, Apple rolled out the Apple
Watch Series 2, which features built-in GPS and the
"Basic wearables, which include most fitness trackers, capability to deploy Apple Pay to make mobile payments.
have benefited from a combination of factors: a clear
value proposition for end-users, an abundant selection In Europe, Oberthur Technologies teamed with Swiss
of devices from multiple vendors and affordable price watchmaker Swatch Ltd. to integrate OT's FlyBuy
points," said Ramon Llamas, IDC Research Manager. Secure Element (a secure payment technology original
"Consequently, basic wearables accounted for 82.8 percent equipment manufacturers can embed into watches or
of all wearable devices shipped during the quarter, and fitness bands) with Swatch Bellamy watches. Currently,
more vendors continue to enter this space." Swatch owners are able to execute contactless payments
across Switzerland.
However, as wearable-device vendors proliferate, entrants
who fail to differentiate new offerings from existing "There is plenty of curiosity about what smart wearables
products may find it increasingly difficult to compete in – particularly smartwatches – can do, but they have yet
an already crowded market. According to IDC, the top to convince users that they are a must-have item," Llamas
said. "The good news is that smart wearables are still in
26 their initial stages, and vendors are slowly making strides
to improve them. But this also means that it will be a slow
transition from basic wearables to smart wearables."
