After 12.2 million smartwatches were sold in the country in 2021, the market continued on a stunning upward trend in 2022, led by domestic brands, with smartwatch sales surpassing the 30 million unit mark. Last year, this figure was over 50 million.
Brand ambassadors such as cricketers Virat Kohli and Hardik Pandya, Olympian Neeraj Chopra and actor Vijay Deverakonda were recruited to appeal to a young audience. Millions were spent. But each of these companies has now run into a problem: Most buyers no longer want smartwatches.
Analysts, retailers and business leaders said mint that buyers of smartwatches with a price of only ₹1,000 ($12) – and instead choose to avoid these watches altogether or wait until they can afford demanding benchmarks – Apple’s “Watch” ( ₹29,900/$350 upwards) and Samsung’s “Galaxy Watch” ( ₹21,999/$260 and up) lineups.
Considerable revenue
This puts brands like Gurugram-based Nexxbase’s Noise, Imagine Marketing’s boAt and many others in a bind – one that may lead to significant changes in marketing strategies. This would be crucial as smartwatches still sell in significant volumes and generate significant revenue for companies like Noise and boAt, who continue to be market leaders despite declining numbers.
Last year, smartwatches worth over ₹12,300 crore ($1.4 billion) were sold. With a market share of 22%, Noise earned a little more than ₹2,700 crore ($300 million) for the year. boAt, meanwhile, had a market share of 14% and earned over ₹1,700 crore from smartwatch sales. The volume and size suggest that this is a market that these brands cannot ignore.
But today, industry players are seeing themselves falter. Last Friday, market research firm International Data Corporation (IDC) India reported a decline of over 18% in smartwatch sales in the first six months of 2024. Coupled with falling sales, the average price per smartwatch has fallen by over 20% annually, giving brands plenty of cause for concern.
A senior executive of one of India’s top three smartwatch brands said mint on condition of anonymity that this market situation was “unavoidable”.
“On the one hand, brands came into the market and lowered their prices to an unaffordable level just to gain scale. Now these prices are hurting us because they have left a rather negative impression on buyers. Even if this is not directly caused by the brand itself, the overall market is reacting to the general situation of the industry – where buyers no longer value these inexpensive smartwatches. That’s why the entire industry is now planning massive marketing campaigns to change the situation,” said the CEO.
However, this is a gigantic task considering how much the market has fallen. In 2021, an average smartwatch was sold for ₹4,500 (61 USD in 2021 exchange rates). A war for market share resulted in average prices falling to ₹3,300 in 2022 and ₹2,200 last year. In June, the average selling price of a smartwatch was only ₹1,700 – a decline of over 60% in less than three years.
“Buyers will see these prices rise. Every brand in this industry will now focus more on premium products, which will become apparent in the coming months,” the CEO said.
“We are exploring a new product strategy that also focuses on more innovative smartwatches that offer better experiences and therefore greater value to buyers,” said Sameer Mehta, co-founder and CEO of boAt.
While boAt continues to have a robust audio business, smartwatch sales fell 45% in the June quarter, according to IDC data. Sales at Noise, the market leader, fell over 32%. Noise has not yet responded mintfor comment at the time of publication.
Gimmicks over
Retailers confirmed that demand was lukewarm at best. Manish Khatri, partner at Mumbai-based electronics retailer Mahesh Telecom, said buyers were no longer asking for smartwatches.
“The phase of smartwatch gimmicks seems to be over. Most brands have failed to retain their customers because they have only focused on making the watches as cheap as possible, which is why buyers don’t even want to actively use them. Now no one comes to our stores asking for smartwatches,” Khatri added.
Nilesh Gupta, director of pan-India retailer Vijay Sales, agreed, saying that demand for smartwatches “is low overall, even though the smartphone market has had a stable summer this year.”
“The main problem is the way brands think about this space. The assumption that India’s 700 million strong smartphone market should also create a corresponding opportunity for smartwatches is wrong because buyers no longer want these extremely cheap smartwatches. There is a huge gap in the market between the domestic brands and Apple and Samsung – a space that OnePlus has left empty. This is an ideal opportunity for phone brands to capitalise on this as most domestic firms will now struggle to lose their overall image in the minds of consumers,” said Navkendar Singh, assistant vice president at IDC India.
As a result, the average price of smartwatches is likely to rise again – but with the promise of better devices with more features. Brands will have to do some convincing to achieve this – which is not entirely impossible, but is a big challenge after three years of sustained marketing campaigns in a different direction.
“OnePlus has already shown us that it is possible for phone brands to make a big splash in this space, as it is a sizable industry after all. While Tata Group’s Titan remains an outlier due to its reputation as trustworthy and reliable among consumers, the others are likely to struggle,” Singh added.
Despite it, mint Research has predicted a nearly 20% decline in smartwatch sales in India this year, even as prices remain low, hurting brands at least in the short term.
