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Jun 18, 2015

The One-trick Pony Lives On

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“My, that’s a large phone that you have,” said the lady. No, I wasn’t in a bar and it wasn’t a pick-up line. It wasn’t even aimed at me, but rather at my daughter who was toting around a gigantic Windows phone. Or as I like to think of it, her portable TV, since all she really uses it for is Netflix.

The scene was a local sculpture exhibit opening, full of people sipping wine while admiring chunks of artfully-place rock and iron. The lady – probably in her late 60s – was taking a break from the excitement. She pulled out her own phone to compare to my daughter’s: it was a three-year old flip phone that had cost her all of $9.99 at a local retailer. She liked it; a lot. And she saw no reason to spend more money on a smartphone.

And she is not alone. While it’s easy to assume that everyone has a smartphone now,the sturdy little feature phone still commands roughly 30 percent of the installed base of phones in the U.S. That’s not bad for a one-trick pony that “just” makes calls and the occasional text message.

The feature phone’s continuing existence is an important reminder that not everyone wants the new shiny toy, or technology trend. Take the wearables market, for example; the smartwatch is often compared to the smartphone, and the activity tracker is dismissed as being the “feature phone” of wearable technology, doomed to oblivion over the next couple of years. But just as with the phone, there’s plenty of room for an activity tracker to thrive in the coming years: heck, owning 30 percent of the space is still a good, and healthy share even if the phone comparison is a fair one. And I’m not actually convinced that it is.

Not everyone needs the full capabilities of a smartwatch; not everyone wants to spend that much money; not everyone wants to charge the device every night; and not everyone really wants to go back to wearing a watch-sized item on their wrist. As such, while the activity tracker space does face some very stiff competition in the coming years, there’s still plenty of opportunity to innovate and expand.

We are already seeing some of this key innovation with activity trackers adding notification capabilities (phone calls, texts, and even emails) that are currently the core of the use case for the smartwatch. We are also starting to see some added capabilities that help the activity tracker to differentiate by being a standalone device, rather than always needing a smartphone nearby. For example, the upcoming Under Armour/HTC device, the “Grip,” includes GPS in an activity tracker form factor, meaning that you can leave your phone at home and still map your run/ride or whatever.

And this is all a good thing, as there has been a relative lack of innovation among activity trackers over the last few years. Having come out guns a-blazing a few years ago, the tracker has settled into a sedate market where it is used primarily for tracking walking steps, rather than anything more athletic. While this certainly helped drive the device into a mass-market, it has opened the category to increased competition, especially from smartwatches.

Speaking of which, as my daughter’s new friend ran out of wonderful things to say about her feature phone, she added: “I might get one of those smartwatches though. Can you imagine how useful it would be to get your email on your wrist?” I looked at her, and the feature phone she loved so much, and didn’t really know where to start with the explanation that she would a) need to buy a smartphone that she currently doesn’t want and b) having bought the smartphone, she wouldn’t actually need the watch because she would already be getting her email on her phone... It was all going to take quite some time to explain; so instead I grabbed my daughter, and professed a new-found interest in the rocks and iron around me.

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