Yahoo News Pebble's downfall and the future of wearables
With a recent flurry of notable activity, the wearable market looks to be in a state of flux.
Activity-tracking titan Fitbit purchased smartwatch maker Pebble on Wednesday, and all reports point to the end of the Kickstarter-birthed brand's line.
Motorola publicly acknowledged its lack of interest in releasing another version of its Moto smartwatch anytime soon, with the company's head of global product development admitting he doesn't "see enough pull in the market." LG and Huawei have confirmed they're not re-entering the field in the foreseeable future, either.
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This comes after Jawbone abandoned its wristband fitness tracker line back in May, while Microsoft Band 2 looks to be the last of its kind for the moment, too.
Meanwhile, Apple and Samsung have both made noise releasing flagship devices with the Watch Series 2 and the Gear S3, respectively. And with Fitbit's Pebble pick-up, it's well-positioned to expand within the wearable space as a whole.
Crunching the numbers
Sales numbers reflect the uneven nature of the market. According to analytics firm IDC, the most recent data available shows that shipments are down on the whole for smartwatch makers, with 2016's third quarter numbers falling 51.6 percent from last year during the same period.
The disparity from year to year was mostly affected by the timing of the Apple Watch release dates (Series 1 was first widely available in 3Q15, while Series 2 was only released with two weeks left in 3Q16) and the Gear S3's release outside the time period.
In that sense, the year-over-year chasm made one thing clear: unless a smartwatch is brand new, consumers are largely staying away.
Possibly in light of these reports, Apple CEO Tim Cook declared holiday spending growth on the Apple Watch Series 2 has been "off the charts," "greater than any week in the product's history," and positioning Apple for a massive 4Q16 comeback.
Meanwhile, the overall wearable market (which combines smartwatch sales with those of dedicated fitness tracking devices) was reportedly up on the whole in 3Q16, with Fitbit leading the way with a 23 percent market share. Per IDC senior research analyst Jitesh Ubrani, "we're already seeing a notable shift in the market" from smartwatches to "simple, dedicated" fitness devices.
But even if Apple's smartwatch isn't really slipping and fitness trackers are outperforming expectations, there still are unanswered questions to be addressed.
What do consumers have to say?
Examining some more detailed and direct-from-the-consumer data might shed light on why the wearable market is looking so volatile. Gartner, Inc. shared the results of its 2016 Personal Technologies Study with Mashable so we could do just that.
The study surveyed 9,592 online respondents from Australia, the U.S. and the U.K. between June and August of this year to gain a better understanding of consumer sentiment toward wearables.
The results of the survey can be seen reflected in the market. Smartwatch usage is still in the "early adopter" stage with 10 percent of people reporting ownership, while fitness trackers have reached "early mainstream" status at 19 percent.
But the real roadblock to widespread wearable usage isn't with how slowly people are buying them. How quickly they stop using the devices is what's most troubling.
"Dropout from device usage is a serious problem for the industry," said Gartner research director Rachel McIntyre. "The abandonment rate is quite high relative to the usage rate."
The abandonment rate was 29 percent for smartwatches and 30 percent for fitness trackers. People gave a few main reasons for ditching their devices: they don't find them useful, they get bored of them or they just break.
For those who didn't go for wearables at all, high costs without much perceived payout was a major issue. "The greatest hurdle for fitness tracker and smartwatch providers to overcome is the consumer perception that the devices do not offer a compelling enough value proposition," said McIntyre.
Others just don't like the look. Twenty-nine percent of survey respondents said fitness trackers are "unappealing" and that design and style keeps them from wanting one.
The expert's analysis
McIntyre thinks smartwatch and fitness tracker makers are at a crossroads: to grow the consumer base, the uses for wearables must stand out on their own as more than just an extension of one's phone.
Apple and Samsung, the two leaders of the smartwatch market, are doing just that. Both the Watch Series 2 and the Gear S3 have ramped up their standalone capabilities.
And even with the low sales, usage rates are rising. Smartwatch use rose in the United States to 12 percent, from 8 percent last year. Fitness tracker usage is up to 23 percent from 17 percent in 2015.
Debuting radical new tech is tough, especially in a space where consumers are already serviced (to an extent) by wristwatches and other wrist jewelry, both functionally and aesthetically. But it's important to remember that we're still only a few years into the development of the product vertical.
“Oftentimes the first players in the market don’t wind up being the successful ones,” McIntyre told Mashable when asked about the culling of brands from the wearable market throughout the year. "Brands drive sales. Motorola was not a successful brand name in the watch market, and Pebble had difficulty growing its brand from a small tech startup."
With that in mind, McIntyre thinks it's likely that the devices being developed by more established names in the watch game, like Fossil, will fare better than expected. "There are other players that have a good opportunity," she said. "There’s a lot of room for experimentation with traditional watch brands in the space."
But as wearables continue to grow, name recognition of the new school is catching on. While Pebble's technology might not have made as big an impact as investors hoped, the branding of a segment leader like Fitbit could give it new life.
And those low 3Q16 smartwatch numbers? Expect Tim Cook to have put his money (he does have a ton of it, after all) where his mouth is in touting the Watch Series 2 revenues. McIntyre thinks that the numbers for 4Q16 will be as massive as advertised.
"There was pent up demand for the Apple Watch," she said. "I expect sales of both Apple Watches to be strong for the holiday season."
With wearables, like many other areas in consumer tech, the message is clear: adoption will take some time, but once the public understands the value of integrating it into their lives, usage will become commonplace.
That, and don't bet against Apple.
