After a big slump in interest in wearable tech devices last year, analysts don’t expect growth rates to increase much over the next few years.
Consumers used about 73 million wearables devices last year, including everything from the cheapest fitness trackers made by Fitbit and Xiaomi to the most expensive smartwatches from Garmin (GRMN) and Apple, according to Forrester Research. The installed base was up just 11% from 2015, after the market had grown 82% a year earlier.
Looking ahead, wearables in use will expand 14% a year for the next five years, hitting 189 million devices in 2022. The value of devices sold will increase 9% a year, from $4.8 billion last year to $9.1 billion in 2022, Forrester predicted.
Analysts have generally been tamping down formerly sky-high expectations for the wearables market. Forrester’s latest forecast for 2022 is below its $9.8 billion prediction for 2021 issued last year, and eMarketer also lowered its forecast recently.
Fitbit has been the poster child for the wearable market’s plunging growth rate. The company’s stock has lost 68% over the past year, as Fitbit (FIT) has struggled with manufacturing difficulties, falling sales, layoffs, and executive changes. Apple narrowed the focus of its smartwatch last year to health and fitness features—though it is still building a broad platform that can run apps, make payments. And run the Siri digital voice assistant. Fitbit is planning to release its own smartwatch in the second half of the year.
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That’s the right strategy as smartwatches will increasingly eclipse more limited function wearables like fitness trackers, Forrester analyst Shaurya Priya notes in a report accompanying the forecast. Watch software from Apple (AAPL), Google (GOOGL), and others is getting much better at meeting consumer needs and will incorporate all of the fitness tracking functions of simpler devices, Priya says.
“The software for smartwatches is constantly improving,” he writes. “Both Android and Apple are coming out with updated operating systems and better user experiences. Swatch, the world’s largest watch manufacturer, is reinforcing its interest in this category by releasing its own proprietary operating system. The number of custom apps available for smartwatches is also increasing.”