Mobile network operators continue to cheer the growth of cellular-capable smartwatches. But analysts warn that the space can't really take off without better service pricing.

Research and consulting firm Strategy Analytics reported that global smartwatch shipments grew 20% in the first quarter of 2020 to reach a total of 14 million units. The firm added that Apple Watch maintained its first position with 55% of the market, with Samsung coming in second and Garmin third.

Figure 1: Strategy Analytics' Wearable Device Ecosystems (WDE) service tracks the global sale of smartwatches.
(Source: Strategy Analytics)

Strategy Analytics analyst Neil Mawston told Light Reading that roughly 22% of all smartwatches shipped worldwide contained cellular connectivity (mostly 4G) in the first quarter of 2020. "Consumers like the convenience of standalone 4G smartwatches that can be used without carrying a smartphone, but they dislike the higher monthly data prices and shorter battery life that can sometimes go with it," he explained.

The growth in smartwatch sales is certainly something mobile network operators are watching. For example, T-Mobile reported growth in its average revenues per account "due to the growing success of wearables, specifically the Apple Watch, and other connected devices." T-Mobile charges customers an extra $10 per month to connect a smart watch to their account.

While operators are clearly excited about the possibility of extra revenues from the sale of connections to devices such as smartwatches and tablets, Strategy Analytics' Mawston warned this is exactly what could dampen the overall opportunity in the space.

"Cellular penetration of global smartwatch shipments this year will 'grow but slow,'" he explained. "The price of 4G smart watches and 4G data plans will need to be reduced or subsidized if US mobile carriers really want the segment to take off."

It's unlikely this situation will change with the arrival of 5G. For example, Verizon is hoping to charge most customers $10 per month extra for 5G access, though it's likely waiting to expand its 5G coverage area before widely instituting that surcharge.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano