Gartner includes more categories of devices in its definition of smartwatches than does IDC. Ubrani said IDC has limited its definition of smartwatches to three essentials: It must look like a wristwatch and not only a wristband; it must run third-party apps on the device; and it must has a watch face or a default watch screen. That means IDC would not include in the smartwatch category a Fitbit Blaze wearable or those by Withings, which can connect to a phone, but don't run third-party apps.
Gartner's definition doesn't restrict the category of smartwatches to those that run third-party apps on the device. Here's the full Gartner definition: "Smartwatches are electronic devices with a primary function of receiving electronic communications (for example, caller alerts, texts or voice calls). They provide a two-way connection via Bluetooth to a mobile connectivity hub (for example, a smartphone), or via cellular baseband or Wi-Fi. Smartwatches, which must display the time, have a glanceable display; however, the watch face does not have to be digital. Smartwatches must also enable the wearer to transmit an electronic signal from the watch (for example, to control an external app or device, or to transmit voice, an emergency signal or biometric data). Examples of smartwatches include Apple Watch, Pebble Steel, Motorola Moto 360, LG G Watch W100 and Samsung Gear S3."
Both McIntyre and Ubrani are encouraged that some new smartwatches have added functions beyond fitness apps. Both the LG Watch Urbane and the Samsung Gear S3 have cellular capability, for example.
Some smartwatch makers do seem to understand the need to offer variety in the designs and the functions of their devices. McIntyre said Fossil offers three basic types of smartwatches, and there are 118 variations of the Fossil Q brand on the company website, with several priced near $200 and several others in the $300 range.
"Fossil is trying to understand what customers want in a smartwatch," McIntyre said. The $369 price for the Apple Watch Series 2 is comparable to the traditional watch market starting price for a luxury model, starting at about $350.
"Traditional watch manufacturers have been rather cautious about entering the smartwatch market," McIntyre said. "They don't necessarily see the smartwatch as expanding the overall watch market size. They are doing pretty well with the watches they have now. They want to get it right. Fossil and others are taking a wait-and-see attitude."