eMarketer slashes wearables forecast, citing weak demand

Fitbit lineup
Fitbit is the leading vendor in a struggling wearables market.

The research firm eMarketer slashed its forecast for the wearables market, saying the devices simply haven’t resonated with consumers beyond a small audience of early adopters.

The company had issued a forecast in 2015 predicting usage of wearables among U.S. adults to grow 60% in 2016. But this morning it pegged growth in the wearables market at only 24.7%, primarily due to significantly weak demand for smartwatches.

Roughly 39.5 million U.S. adults will use a connected wearable device for at least once a month, “far less than the 63.7 million previously forecast,” eMarketer said. Smartwatches have failed due to high price points and a lack of compelling use cases, and wearables will see a market penetration of just 15.8% of the population this year. That rate will grow slowly to reach 21.1% of the U.S. population 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,” eMarketer analyst Cathy Boyle said on the company’s site. “They also reported high price sensitivity. Without a clear use case for smartwatcheswhich have more features than fitness trackers, but significant overlap with smartphone functionalitythe more sophisticated, expensive devices have not caught on as quickly as expected.”

Those sentiments echo recent data from IDC that found the overall wearables market grew 3.1% in the third quarter year over year, with simple fitness bands driving the market. Fitness bands saw double-digit growth and accounted for 85% of wearables sales during the period, IDC said.

Apple claimed a mere 4.9% of the wearables market as Apple Watch shipments plummeted 71%, IDC estimated, although the company still owned 41% of the smartwatch market.

“Apple’s decision to launch its second-generation watches in mid-September, towards the end of the quarter, did contribute to its year-over-year decline in 3Q16,” IDC wrote earlier this month. “However, the primary reasons for the downturn were an aging lineup and an unintuitive user interface. Though both issues have been addressed with the latest generation of watches, Apple’s success will likely be muted as the smartwatch category continues to be challenged.”

Apple CEO Tim Cook took issue with IDC’s findings, saying that the Apple recently saw record-high sales. But Cook declined to give specific sales for the gadget, and it’s clear that the smartwatch segment has failed to live up to a significant amount of hype.

IDC reported in October that global smartwatch shipments sank 52% in the third quarter due to a lack of new devices and platforms. Meanwhile, Pebble was acquired this week by Fitbit for less than $40 million, according to a Bloomberg report, although its debt and other obligations exceed that sum. And Lenovo’s Motorola said last week that it has scratched plans to release a new smartwatch, saying demand simply doesn’t warrant it.

Younger people are the most likely to use wearables, eMarketer said, and roughly 30% of U.S. adults between the ages of 18 and 34 will use the devices next year, outpacing the 17.6% of all consumers. And while early wearables buyers were more likely to be male, more wearables users will be female.