Apple Inc. (NASDAQ:AAPL)’s rumored iWatch could be unveiled as early as Sept. 9, but will it be what consumers are looking for? First Insight, a crowdsourcing and predictive analytics platform, has found that while design and functionality are of importance in a smartwatch, the price has to be right in order for the devices to move out of a niche market and into the mainstream.
What do consumers want in a smartwatch?
On conducting their survey, analysts at First Insight asked participants about 15 wearable devices. They requested feedback on unbranded accessories as well, including pricing and how likely they are to purchase the items.
What they found was that fitness wearables scored the highest compared to social or safety-focused wearables. They said one of the reasons was because they tend to be less expensive. They also discovered that value is more important to consumers than only the design. Analysts at the firm believe that the design is the biggest variable that will influence whether a consumer will buy a device. In addition, they said that positive consumer sentiment doesn’t always match up with how likely a product is to sell.
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The analysts found that women are willing to pay more for wearable devices than men are and that they prefer smaller, less “clunky” devices.
Price, price, price
In terms of price, First Insight reported that the test group’s expected retail prices are about 41% higher than what consumers want to pay for the devices. Consumers assigned the highest overall value to fitness wearables, at least partially because they tend to be more reasonably priced at between $75 and $125.
The firm also reported that consumers tended to be unwilling to pay the proposed sales prices for products that are completely new, especially those that are priced more than $200. Analysts said this reflects the difference between the prices accepted by the mainstream market compared to those accepted by early-adopters.
For example, they found that the earbuds made by Dash could be a big hit with consumers—but only if they came with the right price tag. Consumers were only willing to pay about half of the proposed $299 price tag. In general, consumer sentiment on those earbuds was mostly positive, as they received a 53% positive consumer feedback score. That was the highest of any wearable device they tested. However, because of the high price tag, the overall value assigned to them was four out of ten.
Will Apple’s iWatch fit the bill?
So if these numbers are anything to go by then Apple may have to price its iWatch under $200 in order for it to be a hit with consumers. First Insight Chief Marketing Officer Jim Shea says deciding on a price could be one of the most important decisions Apple makes this year. He points out that in the company’s second quarter earnings report, it reported iPad sales that were lower than expected. He says this means that even Apple isn’t immune from lower-priced competition.
“Apple has a loyal following, but they’re entering the wearables market—specifically with watches—a little late,” Shea told ValueWalk in an email. “According to our research there’s an overall unwillingness to pay extreme prices. Surprisingly, price plays a huge role in whether people will buy something, even if they love it. On many of the products tested we saw that—regardless of high consumer sentiment— people were unlikely to buy high priced wearables over $200.”
iWatch design still a mystery
And then there’s the topic of design, which Apple is especially known for. Although many are expecting to see the iWatch unveiled along with the iPhone 6 on Sept. 9, there haven’t been any leaks showing the device’s design. We’ve seen plenty of leaks showing what the iPhone 6 looks like, so it seems a little strange that the iWatch would be ready to show off to consumers but that no dummy models have surfaced.
So will Apple deliver on design? According to First Insight’s data, the company will do best if it offers more than one size. They found that women—who again were willing to pay more for wearables—preferred smaller wearables. Shea noted that women didn’t really like any of the watches they tested and said that if Apple is planning a one-size-fits-all solution for both men and women, the company may not attract women if the iWatch is too big.
Of the smartwatches they tested, the highest rated among women was the Goccia watch, a fitness tracker that’s about the size of a coin. Women gave it a value score of nine, compared to the men’s value score of six. The watch had 47% positive sentiment among women but 34% among men. Women cited the small size as being a positive. And as you can see from this graphic, the bigger the wearable device gets, the lower the positive sentiment from women (all graphics courtesy of First Insight):
Overall, men tended to like watches more than women, who didn’t like the bulky size of most of the smartwatches that are on the market right now.
A look at the iWatch’s competition
Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and LG Electronics Inc (KRX:066570) both beat Apple to the punch this week by unveiling their new smartwatches. First Insight’s survey was conducted before they came out, but the company offered a list of the smartwatches that could dominate—barring a wildly popular iWatch that checks all the boxes, however. Here’s a look at First Insight’s sales predictions according to consumer sentiment and ratings: