Smarter service strategies for wearables, hearables, and the home will take hold
Consumer IoT vendors will counter challenges to device sales and profitability by embracing services-oriented business models and more nuanced targeting of specific consumer groups and needs. Omdia will examine opportunities presented by health, sport, and other key applications, new form-factors, and novel go-to-market strategies.
Vendors of smart watches, fitness bands, rings, and other wearable devices will increasingly focus on professional health and sports features, driven by advancements in monitoring technologies, medical-grade capabilities, and AI.The rationale is clear. The global wearable device market suffered from stagnant overall shipments in recent two years, but specialized sports watch brands such as Garmin, Coros, and Suunto bucked the trend.They showed stronger profitability and growing market acceptance, thanks to a greater consumer focus on health and fitness post-pandemic, particularly in specialized sports equipment.But the wearable device market is increasingly specialized and driven by personalized user experiences, with vendors focusing on refining operating systems, apps and domain-specific expertise to cater to diverse consumer demands.Key to success in 2025 will be pinpointing which metrics and features will resonate with different kinds of user, to drive adoption of premium services, hardware upgrades, and generally better bind consumers to devices and brands.Vendors must prioritize enhancing data accuracy and privacy, adding AI-powered coaching and advisory features, and applying cutting-edge sports and healthcare science to provide personalized recommendations.Advances in AI will also help start address the many challenges that have held back the usability and value of more radical forms of wearables, such as smart glasses.The integration of computing and media into such devices poses an array of questions about technology, user experience, and privacy. 2025 will be a key year for vendors to experiment with form factors, features, and safeguards to work towards answers.
The home improvement boom of recent years has proved a mixed blessing for smart home vendors. The number of devices sold during and after COVID-19-related lockdowns have been strong, though profitability has remained elusive.For around a decade, many vendors have used business models employed by the telecoms industry to build scale to great effect by selling devices at near or below cost with plans to monetize later, which have yet to materialize or gain traction.Even the largest smart home players have yet to see their strategies deliver returns that offset their product design and software development efforts.They have felt the pain hardest from cloud computing and storage costs rising much faster than expected. Strategies to have consumers bear those increased costs by charging monthly fees for services previously offered for free has been met with fierce resistance from users.As a result, US-based brands linked to tech giants, particularly Amazon’s Ring and Blink, are now setting a new agenda for the smart home based around more compelling services and recurring revenue streams.Brands unable, or perhaps unwilling, to pivot to subscription-based smart home business models, will experience significant competitive turbulence.The global competitive landscape will shrink as many smaller brands will be forced out of the market, unable to sustain the investments required to enhance, or in some cases create, their software and services.
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2025 Trends to Watch: Consumer Communications Apps and Services