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Wearables a Strange Fit, Says CEA

SAN JOSE – Wearables are the fastest growing segment in consumer electronics, but they are also the smallest and most fragmented – and are likely to stay that way. That’s the picture from a recent report by the Consumer Electronics Association presented at the Flash Memory Summit here.

The wearable segment has been nearly doubling since it appeared on the CEA radar screen in 2011 at just $240 million in 2011. It is expected to reach nearly $6 billion in 2016, but remains a segment where winning products and companies are hard to pick, according to Brian Markwalter, vice president of technology and standards for the CEA who presented the group’s findings.

The segment includes products for nearly every customer type from pets and children to extreme sports enthusiasts and the elderly. Smart watches now represent more than half the revenue in the varied segment, but even here debate rages over how widely the most popular product—the Apple Watch—will be adopted.

“There’s a lot of speculation whether smart watches resonate with people or not,” Markwalter said. “You see a ton of app development for the Apple Watch, but the pace has slowed down a bit,” he added.

The smaller segment of health and fitness trackers – pegged at $1.9 billion in 2014 — shows promise for lots of growth. However, it also faces significant challenges.

“Tracker devices did really well in the past holiday season, they’ve become well known and at sub-$100 prices they are an easy buy,” said Markwalter.

So far they have only penetrated about 11% of U.S. households, unlike smartphones now in three-quarters of homes and tablets in nearly 60% of them. Owners report unusually high satisfaction rates (94%) and likelihood of recommending the products (91%), but 56% of consumers say they have no interest in buying them, some noting the devices provide little new or useful information.

“There’s still strong growth for a certain population, but we don’t know where it will peak out,” Markwalter said.

Wearables are the fastest growing segment tracked by the CEA but even in 2016 will still be the smallest (above). It includes a potpourri of many products, dominated by smartwatches (below).

Wearables are the fastest growing segment tracked by the CEA but even in 2016 will still be the smallest (above). It includes a potpourri of many products, dominated by smartwatches (below).

It’s also hard to pick winners in the still emerging category. “The Nike Fuel Band was a market leader in consumer’s minds, owned by more people than other products, and better known than the Fitbit, [but it was canceled and] now Fitbit has been killing it since their IPO, so it’s hard to figure out who will win,” he said.

To read the rest of this article, visit EBN sister site EE Times.

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