REPORT: Australians are ignoring smartwatches and prefer Android over Apple phones

Tim Cook at the Apple launch. Photo: Getty

Australia’s usual hunger for tech has shown a distinct lack of appetite when it comes to smartwatches, with only 205,000 bought in the first half of 2015, according to a study by technology analyst firm Telsyte.

Meanwhile, the Telsyte Australian Smartphone and Wearable Devices Market Study 2015-2019 found that around 3.7 million smartphones were sold over the same period, down 6% on the previous year, with 450,000 new users added to the 17.2 million Australians (72%) with a smartphone.

Sales of Android-based smartphones beat the iPhone in the first half of 2015, with 54% share to Apple’s 41%. Windows phone-based device sales were sluggish at 5% due to the lack of new handsets and Microsoft’s transition away from the Nokia brand.

Telsyte’s research found Sony overtook HTC in the first half of 2015 to become the third largest smartphone vendor in Australia, behind Apple and Samsung.

Telsyte managing director Foad Fadaghi said that despite the hype, 10% of smartwatch users had already stopped using the device and a lack of killer apps was holding back demand. That said Apple had 64% of the market share, but its cost crippled demand.

The slow sales are in stark contrast to smart wristbands such as the Fitbit and Garmin, continue to grow, up 30% on H2 2014, with around two million users.

But Fadaghi doesn’t believe smartwatches have failed. Telsyte’s view is they’ll make up a smaller proportion of a larger smart wearables market dominated by lower cost “smart bands”.

He thinks Apple will release a lower cost watch option shortly.

“The Apple watch remains a luxury gadget, with its sales price typically more than twice the average of rival Android-compatible smartwatches,” Fadaghi said.

“It is difficult to see mass market consumers paying as much as premium tablets or smartphones for wearable technology that does not have significant new or unique features.”

That means smartphones remain the preferred device with Telsyte predicts 4.5 million smartphones will be sold in the second half of 2015.

Telsyte senior analyst Alvin Lee said the market was now at a stage of maturity where growth was driven by demographic factors such as net migration and births. Consumers cited pricing and brand as the most important factors for choosing a smartphone, but factors such as durability and weatherproofing are rising in importance.

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