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Korean businesses are seeking to gain a competitive edge in the wearable smart device market

The keywords of information and communications technology (ICT) are content, platform, network and devices. Among them, content and devices are most closely related to user experience. With the wide use of smart phones having led to rapid growth of wearable smart devices, many share optimism about the future of this market.

Most notably, Apple’s launch of the first iPhone in 2007 led to the widespread use of smartphones. Soon after, a multiple number of other devices including digital cameras, MP3 players and tablet PCs were combined into a single smartphone. This means that smartphones have evolved from simple phones to truly ‘smart’ devices.

Electronic devices, which used to function individually, are now communicating and sharing information with each other, unlocking the potential to provide a wider range of functions. Such connection between devices is referred to as “Machine-to-Machine (M2M),” “Internet of Things (IoT),” or “Internet of Everything (IoE)—all of which mean that various devices in our lives not only provide information but also collect, process and analyze such information to maximize the convenience of users.

The number of connected devices per person is already quite high, and is expected to grow continuously from 3.47 in 2015 to 6.58 in 2020, according to KT Economics and Management Research Lab. Many people use laptops, tablet PCs, Bluetooth earphones and other devices on top of their smartphones and desktop computers. As new devices such as selfie sticks, smart wristbands, smartwatches, drones and other wearables continue to appear, the number of devices owned per person is steadily rising.

In Korea, large conglomerates have led the growth of the domestic smart device market and are gaining global competitiveness. The domestic market is now entering the ‘maturing phase’ for second-generation devices (i.e. PDAs, smartphones, tablet PCs), while newly-developed, third-generation devices (i.e. wearable devices, IoT devices) are leading the change. In order to promote the smart device industry as a new national growth engine, the Korean government announced a number of initiatives, including the Next-generation Smart Device Korea 2020 (2014) and the K-ICT Smart Device Promotion Plan (2015) to promote further growth. Such initiatives by the government are just some of the reasons why many share a bright outlook for the industry.

One of the most widely-used wearable smart devices is the smart wristband or smart band. Smart bands in the early stage, such as Jawbone and Fitbit, were perceived as costly gadgets. This perception changed with the introduction of products like Misfit Shine, which promoted itself as an accessory rather than a device and offered other options at lower prices. Most recently, Xiaomi caused a seismic change in the global smart band market by offering its Mi Band at one-tenth the price of existing smart bands. The price range of the early smart bands stood around KRW 200,000 (USD 180) and began to gradually drop until Xiaomi gained an unrivalved competitive edge. Other latecomers from China have also joined the global race, lowering the overall price of smart bands. As a result, low-price smart bands are now readily available in overseas e-commerce websites, such as Alibaba, for as low as USD 10.

In order to respond to such changes in the global market, domestic manufactures are making efforts to diversify and customize their products to survive in a market that has become increasingly more reliant on ‘red ocean’ strategies. For example, products are becoming more customized to fit the needs of a number of different target groups, launching products designed for patients, children and senior citizens.

Samsung Electronics and LG Electronics, major players of the global smart watch market, are trying to expand their presence in various ways. The U.S. smartphone giant Apple has recently joined the competition with its Apple Watch, and Samsung has launched the Galaxy Gear S2. Meanwhile, LG has continuously introduced new products including the G Watch Rand G Watch Urbane to secure a competitive edge in the global market. 

With competition growing fiercer, Chinese smart manufacturers are now paying close attention to the smart watch market. Some Chinese companies have recently launched smart watches at one-tenth of their competitors’ prices. Against this backdrop, the future smart watch market is expected to be divided into two submarkets—one for high-end products manufactured by large conglomerates and the other for low-price products mostly manufactured by Chinese companies.

Besides smart wristbands and smart watches, wearable devices even come in the form of belts, rings and bags. The interest in the smart wearable device industry continues to grow, as shown in the fact that companies from this sector accounted for 17 percent of 3,500 participants in total at the Consumer Electronics Show 2015. In addition, manufactures are developing more “wearable” and user-friendly products, moving away

from traditional wristbands to rings and clothing.

Korea’s information technologies and services, along with its superb supporting infrastructure, are recognized worldwide. Such recognition greatly contributes to the national branding of “Korean-made” products. In the past, high-quality Japanese electronics led consumers to trust all products made by Japan.

By Ji Sungtae

Director, KIDIA(Korea ICT Device Industries Association)

ji4004@kidia.or.kr