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Friday, June 18, 2021

Growth Outlook for Wearables Slashed

Wearable devices such as Apple Watches and Fitbits have had every opportunity to become the “the hot Christmas” gift the past few years. But once again, they’re not on many wish lists, says eMarketer analysts.

eMarketer has significantly revised its estimates of wearable-device users in the U.S. The still-young category showed early promise, but usage has not expanded beyond early adopters. In October 2015, eMarketer expected usage among U.S. adults to grow more than 60% this year. But according to its latest forecast, it will only grow 24.7%, as smart watches in particular have failed to impress consumers.

This year, 39.5 million US adults will use a wearable device (with internet connectivity) at least once a month, far less than the 63.7 million previously forecast. Smart watches haven’t caught on in large numbers, primarily because of their high price point and lack of definitive use case. This year, usage of wearables will reach just 15.8% of the population. That penetration rate is only expected to grow to 21.1% by 2020.

“Before Apple launched its Watch, fitness trackers dominated the wearables space, and consumer surveys consistently found that tracking health and fitness was the main reason people were interested in wearables,” said eMarketer analyst Cathy Boyle. “They also reported high price-sensitivity. Without a clear use case for smart watches—which have more features than fitness trackers, but significant overlap with smartphone functionality—the more sophisticated, expensive devices have not caught on as quickly as expected.”

Younger people are the heaviest users of the devices. Next year, roughly 30% of adults between 18 and 34 will be wearables users, far higher than the 17.6% estimate for the overall population.

“Younger adults are getting into the wearables market primarily with fitness trackers,” said eMarketer forecasting analyst Monica Peart. “The lower price point and clear use case make sense for this group.”

Interestingly, there is a gender shift happening among wearables users. The earliest adopters tended to be male. But as fitness trackers began to drive category growth, the user base became less skewed, and by 2018, more wearables users will be female.

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