NPD predicts wearable device hype will quickly cool off by 2016
While wearable devices are the tech industry's most hyped category for 2014, market researchers at the NPD Group predict that the market will begin to slow down quickly, contracting by 2016 before returning to more moderate growth.
Wearable devices first began to take off in 2013 with the popularity of the Pebble smart watch and various tiny fitness and health trackers. NPD believes that the market will grow to 48 million units sold this year, and will surge to 91 million units in 2015.
However, in 2016 NPD believes that the market could actually begin to slow down after the hype around wearables begins to die. In its long-term forecasts, the market will again return to growth by 2018, but at a slower rate than the current explosion.
"We expect that the dynamics of the wearables market will be similar to DVD, LCD TV, smartphones, and other digital consumer markets with commoditized hardware," according to Paul Gray, director of European TV research for NPD DisplaySearch. "The arrival of Samsung, LGE, and other large, cost-efficient manufacturers to the wearables market would bring prices and margins down."
For its forecast, NPD has predicted three possible outcomes for wearable device growth: the bearish "forward into the past" scenario, a middle-ground "incidental to essential" scenario, and finally the bullish "persuasive and pervasive" outcome.
For the so-called "forward into the past" outcome, NPD sees wealthy early adopters being the first owners and reinforcing the desirability of wearable devices. This appeal would eventually trickle down to lower ends of the market as prices drop, but NPD sees the market shrinking dramatically as the fashionability of wearable devices fades.
NPD's second outcome, the "incidental to essential" scenario, sees wearable devices becoming essential due to their intrinsic usefulness. In this situation, NPD compared the combinations of devices and services to Apple's iTunes, as something that could "lock in" users to a certain wearable platform.
NPD still believes a "fashion effect" will lead to a slight decline, but in major markets such as North America and Europe, it projects that the "essential" nature of wearables and tightly connected ecosystems would lead strong brands to bundle devices and see a more moderate decline.
The third and final scenario presented by NPD, "persuasive and pervasive," is the most bullish forecast offered by the research group. In this situation, wearable devices offer significant health benefits and body sensing becomes a critical part of everyday life, allowing users to detect medical issues, securely identify themselves, and more.
These strengths could lead private and public healthcare providers to recommend wearable devices to their patients. The health benefits would offset any effects from fashion and hype, and NPD believes sales could plateau in 2016 rather than decline.
Recent rumors have suggested Apple will join the list of electronics makers who are attempting to cash in on the consumer hype for wearable devices. The company has hired something of a "dream team" of experts from the fashion, fitness and medicine fields, leading many to speculate that the company will debut a so-called "iWatch" later this year.
Wearable devices first began to take off in 2013 with the popularity of the Pebble smart watch and various tiny fitness and health trackers. NPD believes that the market will grow to 48 million units sold this year, and will surge to 91 million units in 2015.
However, in 2016 NPD believes that the market could actually begin to slow down after the hype around wearables begins to die. In its long-term forecasts, the market will again return to growth by 2018, but at a slower rate than the current explosion.
"We expect that the dynamics of the wearables market will be similar to DVD, LCD TV, smartphones, and other digital consumer markets with commoditized hardware," according to Paul Gray, director of European TV research for NPD DisplaySearch. "The arrival of Samsung, LGE, and other large, cost-efficient manufacturers to the wearables market would bring prices and margins down."
For its forecast, NPD has predicted three possible outcomes for wearable device growth: the bearish "forward into the past" scenario, a middle-ground "incidental to essential" scenario, and finally the bullish "persuasive and pervasive" outcome.
For the so-called "forward into the past" outcome, NPD sees wealthy early adopters being the first owners and reinforcing the desirability of wearable devices. This appeal would eventually trickle down to lower ends of the market as prices drop, but NPD sees the market shrinking dramatically as the fashionability of wearable devices fades.
NPD's second outcome, the "incidental to essential" scenario, sees wearable devices becoming essential due to their intrinsic usefulness. In this situation, NPD compared the combinations of devices and services to Apple's iTunes, as something that could "lock in" users to a certain wearable platform.
NPD still believes a "fashion effect" will lead to a slight decline, but in major markets such as North America and Europe, it projects that the "essential" nature of wearables and tightly connected ecosystems would lead strong brands to bundle devices and see a more moderate decline.
The third and final scenario presented by NPD, "persuasive and pervasive," is the most bullish forecast offered by the research group. In this situation, wearable devices offer significant health benefits and body sensing becomes a critical part of everyday life, allowing users to detect medical issues, securely identify themselves, and more.
These strengths could lead private and public healthcare providers to recommend wearable devices to their patients. The health benefits would offset any effects from fashion and hype, and NPD believes sales could plateau in 2016 rather than decline.
Recent rumors have suggested Apple will join the list of electronics makers who are attempting to cash in on the consumer hype for wearable devices. The company has hired something of a "dream team" of experts from the fashion, fitness and medicine fields, leading many to speculate that the company will debut a so-called "iWatch" later this year.
Comments
Uh, yep. Fad. We’ll always wear and we’ll always carry, but “super connected” wearables aren’t some revolution.
What a stupid prediction.
How can anybody predict anything about "wearables", when the biggest player on the planet has not even entered the game yet?
There have been multiple half assed attempts at "wearables", with certain companies (scamsung) rushing to market with their terrible devices that have been flops, but it is just dumb to make any predictions about "wearables" at this point.
What a stupid prediction.
How can anybody predict anything about "wearables", when the biggest player on the planet has not even entered the game yet?
There have been multiple half assed attempts at "wearables", with certain companies (scamsung) rushing to market with their terrible devices that have been flops, but it is just dumb to make any predictions about "wearables" at this point.
This is typical of these groups. For a good laugh, go look at their reports from 2005 - 2006 regarding the mobile phone market. Companies actually paid thousands of dollars for those reports!
I can't believe someone paid money for this report, and that someone got paid to write it.
I am laughing, and shaking my head at the fact that people not only make these kinds of predictions with a straight face, but that there are nincompoops out there actually willing to pay for this kind of drivel.
No Possible Dignity.
The Samsung Galaxy Gear was a flop....the Google Glass is going to be a flop, if it's not already....but, the iWatch is bound to be something like we have never seen before or imagined for a wearable computer. I predict Apple's entry will blow us away, and set a new standard for the industry. Apple is taking their time and not entering the field until they have just what they want, and what they know the consumer will oooh and ahhh over...and millions will purchase. So, until Apple enters the field, whenever they do, I am not taking any credit in predictions of "when the wearable market will die out" -- because the real fun hasn't even started!!
How can anyone predict anything at this point. Especially someone like them. I think typically companies like Apple drive what happens with a market down the road.
What a stupid prediction.
How can anybody predict anything about "wearables", when the biggest player on the planet has not even entered the game yet?
There have been multiple half assed attempts at "wearables", with certain companies (scamsung) rushing to market with their terrible devices that have been flops, but it is just dumb to make any predictions about "wearables" at this point.
You're making a number of questionable assumptions yourself. The biggest player on the planet ??. There may not even be a game to play, and your favourite "Player" plays to a small, closed community when looked at from outside the US of A.
You're making a number of questionable assumptions yourself. The biggest player on the planet ??. There may not even be a game to play, and your favourite "Player" plays to a small, closed community when looked at from outside the US of A.
Yeah, that's right, the biggest player on the planet. And by that, I mean Apple of course.
You know, the same Apple that transformed the entire mobile phone industry, and the same Apple that transformed the entire tablet industry.
Making a prediction about "wearables" today is like making a prediction about the mobile phone market in 2006. It's a fools errand.
As for your comment about my favorite "player" only playing to small, closed community, that's not true at all. Apple is the biggest company around, and they are doing quite well globally. There will always be dirt poor regions of the world where Apple is not on top, but even in those regions and countries, they feel the full effect of Apple's innovations, as they are using other cheap devices (Android), that are poor imitations of Apple's breakthrough devices.
You're making a number of questionable assumptions yourself. The biggest player on the planet ??. There may not even be a game to play, and your favourite "Player" plays to a small, closed community when looked at from outside the US of A.
It's not about marketshare. It's about the fact that most companies are waiting to see what Apple does before entering the wearable market. it's about the fact that everyone currently in the wearable market will pivot their game the moment Apple announces their plans. The way Apple sees it, right now there are no wearable users to even address because the numbers are so small. That will change completely when they enter the market and then you will see a global shift towards wearables inside and outside of the USA.
The Hubris and vanity in these silly analyses is amazing. The error bars around each scenario are huge, the scenarios are not the error bars or boundaries.
But in case they really release those aluminum nipple chains with heart rate monitoring, I will buy the feature film length movie of Ive explaining their design.
I see no reason for the wearable electronics market to grow as technology gets cheaper, smaller and more power efficient.
The "wearable market" could be bigger for the liability lawyers than the product manufacturers...
"I was hit by a car while crossing the street wearing Google Glasses"
"My heart rate monitor said my pulse was fine, and then I had a heart attack"
"My blood sugar monitor was showing I had low blood sugar, so I drank 2 liters of cola a day"
"Class action lawsuit filed by lawyers for customers who believed wearable computer technology vendors would not sell their personal information to other companies"
etc, etc, etc...
I can't see any personal interest in wearables. Maybe a health gizmo but probably not.
I wouldn't write it off until we see what Apple brings to the table, if they decide to bring anything at all.
Bluetooth headsets? Headphones? Wrist-worn devices? Footwear? Belts? Jewelry-like devices? Hats/Helmets? Other parts of the body usually adorned with clothing? I think it's unfathomable to think that wearable electronics aren't something we've had for decades and will continue to grow as technology evolves to be cheaper, smaller and consume less power. This isn't some gimmicky idea looking for a solution. It's the future once the the technology catches up to our needs.
By 2016?
Funny. I'm already over it.
What a stupid prediction.
How can anybody predict anything about "wearables", when the biggest player on the planet has not even entered the game yet?
While Apple is no slam dunk for getting it right, to date there is no serious trend of wearables. The field isn't even to the nascent stage. Maybe a bit premature to be ringing the death bells?