Since Pebble burst onto the scene with some fanfare in 2012, very few have doubted the indomitable rise of the wearables market. The world was set to be flooded with smart watches, smart rings, necklaces with inbuilt payment devices, and even smart tattoos, with 2016 the year to see rapid growth. This hasn’t quite happened. Don’t get me wrong, the market is huge - some 39.5 million US adults are expected to have used an IoT device in 2016 - but the astronomical forecasts have proven too lofty.
In the third quarter of 2016, IDC research has shown that the wearables market grew just 3.1%. This growth largely consisted of cheaper fitness devices, and many are questioning whether or not smartwatches have any real place in the market. Price sensitivity, the overlap with a smartphone’s functionality, the need for design in what is essentially a fashion item - there are myriad issues that may hold high end wearables back, particularly as the market becomes more and more saturated by ultimately similar products.
The market’s wobble has led to eMarketer analysts suggesting that its outlook be revised. A world of connected devices - almost all of which are designed for the wrist - may be further away than many expected, with users struggling to find clear use cases for their devices. In particular, smartwatches have struggled. An industry given such optimistic growth estimates as 60% has seemingly achieved closer to 25%, growth that will be particularly underwhelming to those who had invested heavily in its ascent.
The disappearance of Pebble perhaps best exemplified the changing mood of the market. After garnering fame on Kickstarter and subsequently shipping over two million of its smartwatches, the company has been bought by Fitbit for between $34 and $40 million and all of its operations have ceased. The fee apparently just about covers the startups debts, and it’s arguable that a company that started so strongly has fallen thanks to nothing more than an underwhelming product. Indeed, the Financial Times report that Motorola claimed it has no immediate plans to create another smartwatch, given that they ‘do not have broad enough appeal.’
The issue isn’t just limited to smartwatches, though. A Financial Times report on the 2017 Consumer Electronics Show in Las Vegas referred to ‘the reality that there may never be another innovation like the smartphone.’ Today’s products are failing to create the same buzz that Steve Jobs’ original iPhone did a decade ago. VR, the smart home, smart TVs - the show’s key technologies will take far longer to reach ubiquity than the game changing smartphone, something smartwatch manufacturers are learning the hard way.
Despite the somewhat gloomy downturn, the wearables market may find a much needed boost in emerging markets. According to the IDC, The Middle East and Africa (MEA) wearables market saw steady growth throughout 2016, including a 38.3% rise in Q3. Driven by low-cost wearables, it may take some time before smartwatches can effectively penetrate, but the steady growth will buoy manufacturers. And even against the backdrop of falling projections, companies are still finding new innovative wearable solutions. Wearables startup Motiv, for example, have developed a ring with all the data-collecting functionality of a smartwatch, which boasts both waterproofing and a long battery life - though the $199 price tag positions it as very much a luxury item. It remains to be seen whether or not smart rings can find a niche in an already saturated market, but continued efforts to find them suggest companies still have faith.
It remains to be seen whether Pebble’s demise is a death knell for the smartwatch industry. Tim Cook has been defiantly optimistic about sales of Apple’s Watch but is yet to release any figures. Motorola’s omission is telling, and the fact that major apps like WhatsApp are yet to release official smartwatch incarnations speaks volumes. Adoption for new technology can time take, though, and delays to what were frankly astronomical projections should not be read as too much of an abject failure.