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What's stopping people from buying wearables?

17 Aug 2015  | Rick Merritt

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The wearables market is the fastest growing but also the smallest and most fragmented market segment in consumer electronics. While the segment enjoys adoption by sports enthusiasts to the elderly, it still has room for growth as consumers show to hold back from buying them due to the quality of data.

The wearable segment has been nearly doubling since it appeared on the CEA radar screen in 2011 at just $240 million. It is expected to reach nearly $6 billion in 2016, but remains a segment where winning products and companies are hard to pick, according to Brian Markwalter, vice president of technology and standards for the CEA who presented the group's findings.

The segment includes products for nearly every customer type from pets and children to extreme sports enthusiasts and the elderly. Smart watches now represent more than half the revenue in the varied segment, but even here debate rages over how widely the most popular product—the Apple Watch—will be adopted.

"There's a lot of speculation whether smart watches resonate with people or not," Markwalter said. "You see a ton of app development for the Apple Watch, but the pace has slowed down a bit," he added.

The smaller segment of health and fitness trackers—pegged at $1.9 billion in 2014—shows promise for lots of growth. However, it also faces significant challenges.

"Tracker devices did really well in the past holiday season, they've become well known, and at sub-$100 prices they are an easy buy," said Markwalter.

So far they have only penetrated about 11 per cent of U.S. households, unlike smartphones now in three-quarters of homes and tablets in nearly 60 per cent of them. Owners report unusually high satisfaction rates (94 per cent) and likelihood of recommending the products (91 per cent), but 56 per cent of consumers say they have no interest in buying them, some noting the devices provide little new or useful information.

"There's still strong growth for a certain population, but we don't know where it will peak out," Markwalter said.

Wearables table

Wearables are the fastest growing segment tracked by the CEA but even in 2016 will still be the smallest (above). It includes a potpourri of many products, dominated by smartwatches (below).

Smartwatches table

It's also hard to pick winners in the still emerging category. "The Nike Fuel Band was a market leader in consumer's minds, owned by more people than other products, and better known than the Fitbit, [but it was cancelled and] now Fitbit has been killing it since their IPO, so it's hard to figure out who will win," he said.

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