The smartwatch market was valued at $48.14 billion in 2018, and it is expected to reach a market value of $130.55 billion by 2024. One of the most applicable uses for wearables right now is in healthcare and tracking, which is where companies will be putting their best efforts.
In Apple’s most recent quarterly earnings back in July, Apple’s wearables were surprising winners, with Apple Watch sales seeing a rise of 50%. It is estimated that Apple holds roughly 50% of the market share for smartwatches, selling close to 15 million units in the third quarter of 2019. Considering the Apple Watch has only been around since 2015, it makes this feat of market dominance even more incredible that it has only taken a relatively short amount of time.
One of the cornerstones of this rapid growth has been Apple’s keen focus on the application of healthcare to the watch. This comes as no surprise, as Apple CEO Tim Cook himself boldly proclaimed back in January that the iPhone maker’s greatest contribution to mankind would be its health-related services.
Fast forward to 2019, and the Apple Watch Series 5 has ECG (electrocardiogram) capabilities to monitor heart health – including the capability to spot cardiovascular irregularities – menstrual cycle tracking, an app to monitor dangerous noise levels to protect your hearing, stress-reducing breathing exercise apps, diabetes-aid apps to track sugar levels and much more. Oh, and it also tells the time!
It is no secret that Apple wishes to incentivise its healthcare products, and the Apple Watch is at the forefront of this. In the beginning of October, private Medicare plan ‘Devoted Health’ became the first healthcare provider to cover Apple Watch as a benefit, helping members pay for the cost of the device up to $150.
In an increasingly health-conscious world, Apple’s ‘budding’ Watch business may see substantial growth in the future as its technology becomes more embroiled in healthcare. Perhaps there may even come a time when the iPhone is a secondary product to the Apple Watch and its Health apps. With Apple making a massive push into the services industry, it’s Health department may well be one of the company’s key products on show.
Another company that has taken great strides in promoting the health capabilities of its products is Fitbit. However, unlike Apple, Fitbit has struggled to regain the lofty heights of the dominance it once held over the smartwatch market. Back in 2014, Fitbit was the market leader in wearables, holding close to 45% of the market share, whereas now, an increase in competition and lack of innovation has left the fitness tracker manufacturer desperately clinging to around 6% market share.
Why is a focus on health so important then?
Bluntly put, Fitbit is not Apple. The company does not have the resources, brand power or diversity of Apple, and for all intents-and-purposes, Fitbit really just makes fitness trackers, and apart from a subscription health service, do not have a whole lot more to offer.
However, the health capabilities it does have are quite impressive. Fitbit pioneered fitness tracking in smartwatches, with its latest devices offering activity tracking of all kinds, exercise recognition reminders to move, and – something the Apple Watch does not have – sleep tracking. On top of this, it also offers optimized heart rate tracking to ensure cardiovascular health is kept in check.
If one wants a glimpse into the future plans of Fitbit, they need look no further than its recent agreement with the government of Singapore. This deal will allow Fitbit to provide fitness trackers to a potential market of hundreds of thousands in the city, with anyone who signs up for the company’s paid premium health service, ‘Fitbit Inspire’, receiving a free smartwatch. The deal will test out a potential strategy for Fitbit, which will hope to build a large subscriber base, while Singapore looks to reduce the cost of healthcare.
Fitbit has a lot of ground to make up on Apple. The stock has underperformed all year, down 20%, but received a welcome boost in September when it jumped 23% following reports it was considering taking itself private.
With the smartwatch market on the rise – is expected to reach 279 million annual units sold by 2024, a growth of nearly 9% per year – there is every chance Fitbit can get itself back in the game, with healthcare being its potential hail Mary play.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Apple and Fitbit. Read our full disclosure policy here.
Content Manager at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.