Indians loved to flaunt their budget smartwatches. Not any more.

After selling 12.2 million smartwatches in the country in 2021, the market continued on a staggering upward surge in 2022, led by domestic brands, with smartwatch sales crossing 30 million units. Last year, this figure crossed 50 million.

Brand ambassadors such as cricketers Virat Kohli and Hardik Pandya, Olympian Neeraj Chopra and actor Vijay Deverakonda were roped in to appeal to a young demographic at the cost of millions. However, each of these companies has now run into a problem—most buyers no longer want smartwatches.

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Analysts, retailers and company executives told Mint that buyers have started finding little value in smartwatches priced as low as ₹1,000 ($12)—and are instead opting to completely stay away from these watches or hold off until they can afford aspirational benchmarks—Apple’s ‘Watch’ ( ₹29,900/$350 onward) and Samsung’s ‘Galaxy Watch’ ( ₹21,999/$260 onward) lineups.

Sizeable revenue

This leaves brands such as Gurugram-based Nexxbase’s Noise, Imagine Marketing’s boAt and a host of others in a pickle—one that can lead to considerable shifts in marketing strategies. This would be crucial because smartwatches still sell in considerable volumes and generate sizeable revenue for the likes of Noise and boAt, which continue to lead the market despite falling numbers.

Last year, smartwatches worth over ₹12,300 crore ($1.4 billion) were sold. With a market share of 22%, Noise earned just over ₹2,700 crore ($300 million) for the year. boAt, meanwhile, had a market share of 14%, earning over ₹1,700 crore from smartwatch sales. The volume and scale imply that this is not a market that these brands can do away with.

Yet, today, industry stakeholders are seeing them falter. Last Friday, market research firm International Data Corporation (IDC) India reported a drop of over 18% in smartwatch sales in the first six months of 2024. Coupled with falling volumes, the average price per smartwatch dropped by over 20% annually, leaving brands with a lot to worry about.

A senior executive at one of India’s top three smartwatch brands told Mint on condition of anonymity that this market situation was “inevitable."

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“On one hand, we had brands come into the market and reduce prices to an unsustainable point just to build scale. Now, these prices are hurting us because this has somewhat cemented a negative impression among buyers. Even if that is not directly caused by your own brand, the overall market is reacting to the general situation of the industry—where buyers no longer find value in these inexpensive smartwatches. That is why the entire industry is now looking at hefty marketing campaigns to turn things around," the executive said.

This, though, is a gargantuan task because of just how far the market has fallen. In 2021, an average smartwatch was sold at ₹4,500 ($61 in 2021’s forex rates). A war for market share led average prices to fall to ₹3,300 in 2022, and to ₹2,200 last year. As of June, the IDC data pegged the average selling price of a smartwatch at just ₹1,700—a fall of over 60% in less than three years.

“Buyers will see these prices go up. Every brand in this industry is now going to focus on more premium products, which will become evident in the coming months," the executive said.

“We're looking at a new product strategy where we'll also focus on more innovative smartwatches that offer buyers better experiences, and in turn, greater value," said Sameer Mehta, cofounder and chief executive of boAt.

While boAt continues to have a robust audio products business, its smartwatch sales, as per IDC data, fell 45% in the June quarter. Sales at Noise, the market leader, fell by over 32%. Noise was yet to reply to Mint’s request for comment at the time of publishing.

Gimmicks over

Retailers affirmed that demand is lukewarm, at best. Manish Khatri, partner at Mumbai-based electronics retailer Mahesh Telecom, said buyers are no longer asking for smartwatches.

“The smartwatch gimmick phase seems to be over now. Most brands failed to build buyer retention because they were only focused on making the watches as cheap as they could, which is why buyers aren’t even keen on using them actively. Now, no one comes into our stores to ask for smartwatches," Khatri added.

Nilesh Gupta, director of pan-India retailer Vijay Sales, concurred—stating that demand for smartwatches “is low overall, despite a resilient summer that the smartphone market had this year."

Also Read: Smartwatch prices drop as war for market rages

“The key issue is in the way the brands thought about this space. The hypothesis that India’s 700-million-strong smartphone market should create an equivalent opportunity for smartwatches too is wrong because buyers no longer want these outright inexpensive smartwatches. There’s a huge gap in the market between the domestic brands versus Apple and Samsung—a field that OnePlus has left vacant. For phone brands, this is an ideal opportunity to cash in because most of the domestic firms will now struggle with doing away with their overall image in the minds of consumers," said Navkendar Singh, associate vice-president at IDC India.

As a result, the average price of smartwatches is likely to inch up again—but with the promise of better devices with more features. For brands, this will need some convincing on their part—which isn’t entirely impossible but is a tall order to achieve after three years of sustained marketing campaigns towards a different direction.

“OnePlus has already shown us that it is possible for phone brands to strike big in this field, because this is a sizeable industry, after all. While Tata group’s Titan remains an outlier due to its trust and reliability reputation among consumers, the rest are likely to struggle," Singh further added.

On this note, estimates from four market researchers suggest that the domestic smartwatch market may see a 20% decline in sales this calendar year. This is expected despite the average price of smartwatches being at their lowest-ever. With the two factors combined, smartwatch brands in India look set for a bleak year ahead.