In the quarter ending March 2024, India’s wearables market grew in single-digit figures (2.1 per cent) for the first time after growing in double digits ever since 4Q17. The increased competition and adoption also brought down the average selling price (ASP) across the segment. The ASP declined by 17.8 per cent in 1Q24, to a record low of about Rs 1,500 from Rs 1,900, as per International Data Corporation’s (IDC) India Monthly Wearable Device Tracker.
The last year also witnessed the entry of newer players across various categories of wearables, such as wireless audio devices and smartwatches. Amid this, the incumbents have faced increased competition. In an exclusive conversation with Outlook Business, wearables brand Noise co-founder Amit Khatri shares what he makes out of the evolving competition, category expansion, developments in the company’s recent partnership with audio giant Bose, and more.
Edited Excerpts:
What do you think of the evolving competition in the market with new players, including legacy brands and unbranded ones, joining the smart wearables movement?
The way the market is behaving, I feel that it is a good sign. In fact, I would rather say that when the situation is tough, it will push the right people to innovate and move up, and the weaker ones will be out.
The market is at a hyper-growth stage where you can expect more competition. India currently has more than 600 million smartphone users and about 100 million smartwatch users. In other markets, the penetration of smartwatches among smartphone users is around 25 per cent. This shows that there is still a lot of headroom in India. In the initial years, everybody (in the smart wearables segment) was focused on acquiring users. While new users ask for a basic product, repeat users demand an upgraded product. Since the share of repeat customers has gone up to 20 per cent, whichever brand innovates is likely to stay ahead.
The 2023 year-end IDC report showed Noise’s market share stagnating and falling in the overall wearables and smartwatch segments, respectively. Your competitor, Fire-Boltt, has managed to hold on to its market share in both of these categories. Does Noise have a specific strategy to take on competition in these segments?
As per the recent IDC report (1Q24), Noise has shown a positive trajectory with a growth of 19 per cent as compared to the other top brands. This is a result of our strategic approach, agility, and dedication to delivering unparalleled value to our consumers. We have also witnessed remarkable growth in the TWS category, recording an exceptional 117 per cent increase. We are committed to continuing this momentum and aiming to further double down in the audio segment.
Read: Noise Collaborates With Airtel Payments Bank And Mastercard to Launch A New Watch To Pay
Since the industry is getting crowded in the existing product categories, do you plan to use the launch of your smart ring to reposition noise as a health and wellness category?
We call ourselves a connected lifestyle brand. We believe that any category where we can improve the lifestyle of the consumer or make it better is one we should enter. We are also looking at ecosystems and community play. This means that if a consumer is using a noise device, we want to ensure they can interoperate between multiple devices. A smart ring is an extension of the devices we currently sell. It is another form of wearable for those who already have a smartwatch but want something more minimal with which they can sleep at night. It is also a diversification strategy to cater to a newer set of users.
What kind of use cases do you see for these products, such as the tap-to-pay smartwatch and smart ring?
As I said, we need to build it as part of an ecosystem. Since we transact every day, we look at how to embed payments on a ring, a smartwatch, or any other device. Another use case could be for commuting by allowing access to metro cards using smart wearable devices. And how about controlling my electric vehicle or home devices using a smartwatch?
With the evolution of the internet, watches will have 4G connectivity. Once that happens, your dependence on smartphones goes away. You will be able to get real-time health analytics, order food, do ticketing, and make payments using your smartwatch. This is where the market is heading towards.
Interesting. It’s been about a half year since global audio giant Bose entered a strategic partnership with Noise. How has that helped the company so far?
They (Bose) see India as a large market and are trying to enable Noise to leverage their patents and technology and maybe fine-tune some of the existing product portfolio of Noise so that the users can have a better experience.
Read: BigBasket to Soon Deliver Mobile Phones and Wearables Through Quick Commerce
We have not worked on any geographical expansion so far. But they will help us enhance the audio experience to a level India has not seen till now—in terms of sound quality, noise cancellation, and overall sound performance.
When will these products be commercially ready?
We don’t have further details to share. We will keep you posted.
Besides the funding from Bose, you haven’t raised any more capital. We also saw your profit tank in FY23. Are you looking for more funds?
We are unit-level positive. There are no funding plans currently. I think we are sorted here, as we have internal capital.
What are your plans for quick commerce and offline presence?
For a brand, a major chunk of revenue comes from tier-1 cities. But the real growth is in Tier 2 and Tier 3 places where internet penetration will happen. We see that consumers also want to touch and feel the product before buying it. In that way, offline expansion will help us grow as an organization. So, we will continue to push ourselves there.
In terms of quick commerce, we are present there, and it is picking up well for us.
Moving forward, what will the focus areas be for noise?
We will keep investing in innovation and R&D. Noise Labs is where we innovate and incubate new stuff. The smart ring is an outcome of that. So, we'll keep investing there. We want to be a full-stack organization from R&D to manufacturing, which we control now. So, we want to keep continuously investing in the right set of people to grow the business. Product and people will be the two focus areas for us.
