Gartner said Tuesday that Samsung Electronics and LG Electronics may need to adjust strategies in the wearable device business to strengthen their brand's position.
The global market research agency said in a briefing session in Seoul that many fashion brands are launching smartwatches as jewelry or luxury items in the second phase of the wearable devices market. Gartner stressed that electronics makers are recommended to partner with traditional watch brands on quality features.
"Customers believe that fashion brands can set a new trend in the smartwatch industry tapping into their strong brand power and consumer channels, which many electronics makers do not have," Gartner's research director Angela McIntyre said. "Major wearable device makers like Samsung Electronics and LG Electronics will have to modify their strategies to follow the changes in the market."
McIntyre said the top players in the wearable devices market in the next two years will change as branding has increasingly become the key to a higher profit margin. The new market can be compared to the first-generation wearable devices market between 2013 and 2014, represented by Google Glass and smart wristbands by Nike, Jawbone and Fitbit.
McIntyre also said the strong watch brands such as Swatch, TAG Heuer, Montblanc, Casio, Fossil and Guess will hold about 30 percent of the smartwatch market share by 2020, followed by Apple with 20 percent and other first-tier consumer electronics brands such as Samsung, LG, Sony, Motorola, HP and Huawei.
She recommended electronics makers to sell devices to top traditional watchmakers to benefit from their brand positioning, leverage their consumer channels and learn from their design choices.
During the briefing sessions themed "consumer technology market scenario," Gartner also said mobile payment services will not replace credit cards.
"Unlike common misconception, mobile wallet services such as Apple Pay, Samsung Pay and Google Wallet will only provide alternative user interface or experience in purchasing with mobile devices," Gartner's research director Sandy Shen said. "Many customers still prefer other payment methods because they think these new services are not secure enough."
Shen said software-based mobile wallet service providers such as PayPal will establish the mainstream of this sector, while businesses such as Starbucks and Uber will emerge in the offline-to-online segment.
She also said, in the competition of hardware-dependent mobile wallet service providers including Samsung, Apple and Google, Apple is expected to be eventually successful in the U.S. market.
"Apple Pay will have limited impact before 2017. But it is highly trusted and thus will be successful in the United States," Shen said. "Samsung Pay will give the electronics giant more device play, despite its uncertain ecosystem build-outs. Google Wallet is expected to be a follower to Apple Pay in the near term."