For companies that make activity trackers, the initial sale to consumers has been the easy part of the process. But, getting customers to use the products and buy more has proven tricky.
Garmin, the pioneering maker of GPS devices, has found a successful formula: focus on the dedicated outdoor enthusiast. While the overall sales for wearables is slowing the category was up just 3% in the recent third-quarter, according to research firm IDC Garmin managed to grow its wearable sales by 12%. It’s now the No. 3 player in the space, ahead of Apple. Fitbit still holds a wide lead on everyone with China-based Xiaomi at No. 2.
For years, Garmin was known for its car GPS devices. But along the way Garmin also sold portable devices to hikers, runners, cyclists, and other adventurers. It’s a core group of users that thrive on data, and will usually pay up to get it.
Garmin more recently inserted its GPS technology into smartwatches and activity monitors, to track exercise info and routes in real time. While in Las Vegas for CES, Barron’s Next chatted with Garmin about its wearables business and its latest line of “Fenix” adventure smartwatches.
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The watches have heartrate monitoring and over a week of battery life, plus they’re all waterproof. The biggest model will go for $700, while the two smaller ones start at $600. All three will be available this quarter.
“A lot of people who traditionally bought handheld devices are now transitioning to wearables,” said Dan Bartel, Garmin’s vice president of sales. “The new Fenix, especially the new Genix 5X with mapping, can replace a lot of the products people used to have.” At 51mm, the Fenix 5X is the largest watch in the family, and comes preloaded with maps that are useful for cycling and other activities.
For a sense of size, 51mm is more than 20% larger than the face on the larger Apple Watch, but rugged adventurers may not care about bulk.
Handy features help keep users interested in their wearables, but people won’t be so inclined to put on products that they don’t find attractive. That’s where Garmin seems to be focusing its attention. The latest Fenix models don’t have dramatically different functionalities but they’re a step up in aesthetics and hardware.
Garmin’s mid-size model, the 47mm Fenix 5, has an industrial look but is more compact than its predecessors. And the watch, like the rest of its family, now comes with bands that snap into place. Previously you had to screw in new ones. The smaller, 42mm Fenix 5S has a more feminine look.
“The one area where we’ve been negligent is in addressing the female market,” Bartel told Barron’s Next. Most Fenix users download their activities, so the company can see that about 95% are male.
The Fenix 5S attempts to be a watch that women would want to wear all the time. It’s still not the most stylish device, but it’s a lot better looking than the previous version, which Bartel admitted was clunky for women. For context, 42mm is the size of Apple’s larger Apple Watch face, and larger than the 38mm model that’s more popular with women.
While sales of activity trackers have slowed, they still look good compared to smartwatches, which seem to be in freefall. Smartwatch sales feel fell 52% in the recent quarter, according to IDC. We asked Bartel about a slowdown in the overall wearables industry. “The wellness side is slowing,” he said. But, “We certainly have seen no slowing in our outdoor side. The fenix was our fastest growing segment last year.”
Companies have largely given up on trying to beat Fitbit in appealing to the mass market, focusing on more niche markets.
We saw a bunch of those devices at CES this year, including ones that measure children’s sleep and those that track mental health. We can’t say whether these products will catch on, but Garmin provides a model for how to gain traction in the crowded wearable world: start with a niche and grow from there.
Date: January 09, 2016