The Strategist

Chinese smartwatch to conquer America

08/10/2016 - 16:26

Technological startup Mobvoi Beijing is readying to make the first attempt to conquer the western markets with launch online sales of its smart watches in the United States. The technological breakthrough, made lately by many Chinese companies, fueled ambitions of their leaders. Yet so far, no one manufacturer of smart devices from China failed to find its own niche in the western markets, dominated by Apple and Samsung. Neither Xiaomi, which demonstrated explosive growth in the smartphone market in 2013, nor owner of the more prestigious brand Huawei managed to significantly push their smartphone sales in mature markets, even though Huawei is a serious competitor for Apple in China.
Companies from China find it particularly hard to promote their own brands in Western markets since the US and European citizens associate Chinese goods with cheap imitations of famous brands. Mobvoi intends to break this stereotype, promising that quality and design of its smart watch Ticwatch are not inferior to Apple products. The cost, $ 200, also seem much more attractive. Sales of Ticwatch in the US market will begin in September.

Interest in the Chinese company brand could be fueled by the fact that Mobvoi has received financial support of one of the world's largest technology and Internet companies - Google, said Jason Low, an analyst at Shanghai research firm Canalys. "The watch itself has generated considerable interest among consumers as the manufacturer is a Chinese company associated with Google", - he says. 

Last year, Google acquired a stake in Mobvoi - according to informed sources, the share was 10 to 20%. Before that, Mobvoi had developed a software for voice recognition in Chinese, and signed a contract to supply the product to Google. The latter intended to use the technology in Android Wear. Voice recognition technology of Mobvoi is also used by American automaker Ford and German company Bosch.

Earlier, Mobvoi raised $ 75 million from different investment funds, including Sequoia Capital China. The company was founded in 2012.

Previously, Apple has got in big trouble. Not only smartphones sales, but also the market of smart watches experienced great difficulties. Sales growth of Apple Watch unexpectedly went near the zero mark, pulling the entire world market of this type of device down. Excitement and rapid demand, surrounded the very first smart watches, turned out to be essentially a soap bubble, which burst with a bang and startled the market.

Global sales of Apple Watch have decreased by 55% in the second quarter of 2016. Their collapse caused an avalanche, so that the global market of this type of mobile device lose 32%. At the same time, some vendors of Android-based smart watch have managed to increase sales.

Among them is Samsung. Sales of the company’s smart watches Gear increased by 51%, and amounted to 600 thousand pieces.

The market newcomer, Lenovo, went up to the third place, with 300 thousand pieces sold. 

  Analysts see a link between drop of Apple Watch and stagnation of iPhone sales. The situation, however, could change with the release of the new iPhone 7 this fall.

In general, Apple Watch is clearly losing in confrontation with Android-based competitors. The reason, according to some, is that Apple Watch lacks competitive advantages. In addition, Apple Watch is quite costly, which is a clear disadvantage.