Asustek expected to discontinue ZenWatch
Taiwan based Asustek (2357.TT), well known for its ZenFone smartphone line and Zenbook laptops, is said to be contemplating ending the production of its ZenWatch smartphone line, which it began in September 2014. The smartwatch series, with its last entry the ZenWatch 3 (released 12/2016), have all had OLED based displays but somewhat limited features and functionality. While Asus has been among the top PC and tablet vendors worldwide for a number of years, they have made it into the top 5 smartwatch lists only on occasion, usually after a new model was released, and we believe now have a share ~2% of the smartwatch market, with 5k to 6k units/month being produced according to supply chain vendors.
While wearable unit volumes rose 22.3% last year, the market for smart watches has been growing considerably faster, albeit from a much smaller base, with the US holding a near 50% share in the early years (2014/2015), but declining to a meager 17% this year[1], as competition from traditional watch companies heats up. Brand recognition in the US is considerably oriented toward Apple (AAPL) and Samsung (005930.KS) with 50% and 29% brand recognition among US consumers. Asus did show up with a 5% brand recognition in the US, but one would expect a higher showing in Asia. We would expect the smartwatch category to continue to grow, but with an increasingly narrower group of vendors, and a more homogenous mix of CE companies and traditional watch companies that have added digital features to their analog offerings.
[1] Forecast - Statista
While wearable unit volumes rose 22.3% last year, the market for smart watches has been growing considerably faster, albeit from a much smaller base, with the US holding a near 50% share in the early years (2014/2015), but declining to a meager 17% this year[1], as competition from traditional watch companies heats up. Brand recognition in the US is considerably oriented toward Apple (AAPL) and Samsung (005930.KS) with 50% and 29% brand recognition among US consumers. Asus did show up with a 5% brand recognition in the US, but one would expect a higher showing in Asia. We would expect the smartwatch category to continue to grow, but with an increasingly narrower group of vendors, and a more homogenous mix of CE companies and traditional watch companies that have added digital features to their analog offerings.
[1] Forecast - Statista
Wearables Unit Volumes & Market Share - Source: IDC 5/2017
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