The smartwatch market is relatively new, but, as with all tech products, consumers either love smartwatches or hate them. Analysts seem to think that the smartwatch market is a fad (a rather dead one at that, so they say), that smartwatches will never reach the height of smartphones and that they’ve been dead since their arrival to the market. There are companies out there, Samsung among them, that disagree with analysts, but there are those consumers that have never tried a smartwatch and would rather keep it that way.
And then, there are those who would love to try more smartwatches than they can currently, but finances are hard to scrape together. It’s difficult to ask consumers, after spending $800 on a smartphone, to then spend $350 for the latest-generation smartwatch for which many will never see anything other than a leisure return. Many consumers visit their local carrier stores, only to see carriers sell them Bluetooth-only or 4G-connected smartwatches that will never yield a financial return. “Why spend money on something that will bring $0 back in return?” Some ask. In response, these consumers avoid smartwatches like they avoid accidents.
But the reality is that the smartwatch market as a whole is a niche market that is struggling to encourage consumer spending. Picking up a 4G-connected tablet from a local carrier requires paying the entire full retail price up-front. Why? Because there’s little market demand for tablets; the same can be said for smartwatches. Compared to smartphones, they’re not pulling the same traffic or experiencing the same demand.
Carriers see little need to do anything to sweeten the pot and encourage smartwatch adoption because few consumers are buying them. I myself once worked retail and, despite the numerous compliments I received regarding the Gear S on my wrist, many consumers would rather stick with their $15 Jawbone fitness band than spend twenty times as much for a smartwatch that would net them “zero” in buying a second one.
Samsung can blaze the trail and make a move here that would encourage the market as a whole. After all, with Samsung’s cross-platform compatibility for the Gear S3 Frontier and Gear S3 Classic, many consumers are looking to Samsung’s latest as the smartwatches to own. So, with that said, Samsung can make the buy even sweeter than it is already.
First, I’d like to see Samsung push installment plans for Gear smartwatches. Obviously, carriers are only interested in deals if it involves money for them, so I think 4G-connected smartwatches should come with installment plans for customers. In the same way that customers pay for their 4G data on smartwatches each month, and in the same way that consumers pay on their smartphones each month, they could pay on their smartwatch each month. Samsung could provide installment options for Bluetooth-only models, though it would be nice to see carriers do both (though I struggle to believe carriers would care about Bluetooth-only models).
If the smartwatch costs $350, for example, customers could pay $15 each month alongside of their $5-$10 data bill without being required to fork out the entire amount up-front. Yes, carriers will have to participate here, but I think Samsung will have to be at the forefront of pushing this agenda with carriers (I doubt they’ll agree voluntarily).
Next, alongside of installment plans, I’d like to see Samsung add trade-in options. Similar to smartphones, trade-in options for Gear smartwatches would encourage buyers because they know that, at trade-in time, they’d get an amount off their second or next smartwatch.
Spend $350 on the Gear S3, for example, and the consumer could see $150 slashed off the Gear S4 when the time comes to buy it. With only $200 to pay for the Gear S4 as opposed to the full amount for the Gear S3, Samsung Gear S3 customers would feel as if their purchase and support of Samsung matters. It would give the same feeling as their smartphone purchases.
SK Telecom has done something along these lines with its exclusive, Gear S3 Classic LTE launch: the carrier created a Gear Happiness Compensation Program whereby owners of a previous Gear S device (with some boundaries, of course) can bring in an older Gear smartwatch and get $43 off the new Gear S3 Classic LTE. Of course, I sure hope consumers get more than $43 off, but this program (dollar amount excepted) is the kind of program I think Samsung could launch worldwide and encourage carriers regarding.
If Samsung can encourage consumers with installment and trade-in options that discount future smartwatches, consumer numbers will grow, gaining app developer interest, leading to the growth of a bustling app ecosystem. Pretty soon, consumers will see that Samsung rewards buyers for their smartwatch purchases while rival platforms do not, and they’ll be far more inclined to buy new smartwatches from Samsung each year. Maintaining smartwatch customers and gaining new ones will lead to growth in smartwatch marketshare.
Cross-platform compatibility with Android Wear and iOS is a good start, but not enough. Installment plans and trade-in options will push Samsung even further ahead than where it is now.
Installment plans and trade-in options must start with Samsung, though. Samsung has said “we lead, and others follow,” and implementing these two new features will make the smartwatch market better for consumer spending – which will encourage smartwatch adoption at large. Isn’t that what it means to deliver what’s next now?