Smartwatch prices drop as war for market rages

livemint.com:

Indian market in 2014. According to industry insiders, the razor-thin profit margin on smartwatches raises concerns over the long-term viability of many brands. Even those that manage to survive this might struggle to woo budget-conscious customers into transitioning to more lucrative premium products, they said.

Three industry executives said the lowest-priced smartwatches in the market yield minimal margins, ranging from just Rs100-200. While the margins are higher on more expensive products, the average selling price of smartwatches was at an all-time low in the June quarter. According to an International Data Corp.

(IDC) report on 10 August, smartwatches are priced at an average of $25.6 or a shade over ₹2,100. This suggests that most smartwatch sales driving sector growth are at the lowest price bracket. Boat co-founder and chief marketing officer Aman Gupta said there “is a price war now".

“Brands are aggressively vying for a bigger stake in the market, with some making unwanted noise and also striving to attract funding by showcasing their market share. This approach seems unsustainable, pointing towards an inevitable need for consolidation. Well-funded players from Peak XV’s portfolio and even Titan (from the Tata Group) have entered.

The upcoming period will be very interesting to watch out for," he said. A senior executive of another smartwatch brand, requesting anonymity, said with two top smartwatch brands consistently slashing prices, it has become “difficult for competitors to sustain higher prices, which has made the market difficult ." However, the drop in prices has helped the market surge ahead. IDC India said smartwatch shipments doubled to 12.8 million units in the June quarter from 6.4 million units