Why Consumers Are Connecting Smartwatches to Cell Plans, But Disconnecting Tablets

February 20, 2019, 8:44 PM UTC

For the first time since Apple introduced cellular-capable iPads in 2010, more people took their tablets off their U.S. mobile plans last year than added them, according to a new report.

But the reversal wasn’t all bad news for wireless carriers Verizon (VZ), AT&T, Sprint (S) and T-Mobile (TMUS), said longtime industry analyst and consultant Chetan Sharma, who compiled the data. The number of people connecting cellular-capable smartwatches has grown from almost none a few years ago to millions last year, though he declined to disclose the exact figures.

“Consumers are satisfied with attaching their tablets to their smartphones or just using Wi-Fi,” Sharma said.

At least in terms of Wi-Fi, connecting is a lot more convenient now than a few years ago. The number of public Wi-Fi hotspots at places like coffee shops and airports nearly doubled to 124 million worldwide in 2017 from just 64 million in 2015, according to Cisco Systems.

But hotspots are generally a bad option for smartwatches, which are increasingly used on the go for tracking exercise and fitness activity, listening to music streaming, and checking texts. The alternative is for consumers to pay carriers $10 monthly to add a smartwatch connection to their plans.

Although Apple (AAPL) wasn’t the first smartwatch maker to add cellular capability—its first connected Apple Watch models debuted in 2017, a year or two after some rivals. But it was the first to grab the attention of large numbers of consumers, Sharma said.

He calls the connected version of Apple Watch, which starts at $500 for Series 4, the “the sleeper hit” of the wireless market in 2018. Apple doesn’t disclose how may watches it sold, cellular or total, but analysts estimate it moved about 25 million last year with forecasts of 30 million to 35 million for 2019.

“The new version of Apple Watch has better battery life for the cellular version and consumers seem to like having connectivity on their wrists,” Sharma says.

Still, connected tablets also saw rapid growth cellular connections for a few years, before tailing off. That could happen with watches, too, but Sharma is optimistic.

“It remains to be seen,” he says. “But given that watch is now tightly linked with healthcare, there is some good synergy.”

Overall in 2018, three out of every four new connections for the carriers was something other than a phone, Sharma said. Connected cars, a category dominated by AT&T (T), grabbed the largest share of new connections—about 40%—followed by phones at 25%, smart devices like cameras or sensors at 16%, and wearables at 12%.

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