Activity trackers and smartwatches are showing strong growth and, according to a new study, fewer people are discontinuing use after the novelty wears off.
Wearable devices such as those from Fitbit, Samsung, Jawbone and Pebble are growing in popularity, despite some media reports to the contrary spurred in part by Nike ceasing production of its Fuelband activity tracker earlier this year.
Activity trackers and smart watches are hot items among adults across all ages, genders and regions, according to a new study from Endeavour Partners. The study shows 77% of those who use activity trackers and smart watches are still using their device three to six months after obtaining it, and 65% continue to use it overall. This compares to a September 2013 study, as reported in TechRepublic, that showed that half were no longer using their activity tracker, and a third of those had lost interest within six months.
The latest study was conducted in May and June this year, and of the 20,000 original respondents, the pool was narrowed down to those 1,700 US adults who used an activity tracker or smart watch. "We ruled out the Garmins, etc, in order to keep the category pure, because there's a lot of consumer confusion about what is and what isn't a smart watch or activity tracker," said Dan Ledger, principal at Endeavour Partners.
"It's been almost a year since our first survey and we see usage improving, but we still have a long way to go before these wearable products are genuinely useful for the mass market," Ledger said. Part of the problem is that there remains a novelty appeal to wearables, and a significant percentage of adults do put them aside and forget about them over time.
There's strong growth in the market, with three times more people obtaining them in the last six months than in the previous 6-12 month period. Even in the previous three month, the numbers were rising, with 586 people obtaining them compared to 438 in the previous three-month period.
Ledger said he attributed this to a rise in employer-driven wellness programs, and also the general intrigue that surrounds the devices as people are promised the idea of better health and fitness.
The study also asked the brands that people are purchasing. Ledger pointed out that this isn't a measure of market share, but simply the number of people who have bought a device within the allotted time period.
With 17% reporting obtaining a Samsung device less than three months ago, it shows how Samsung has quickly captured a strong segment of the market, despite only releasing the first Galaxy Gear last September, and the Galaxy Gear 2 in May.
"You really see how powerful these existing brands are. What this means for everyone else is that if Samsung and Apple and these other big OEMs get into the game, it's going to completely change the landscape and have a huge impact on small-to-medium-sized companies. Over the next year this is going to change a lot more, obviously, and what this means is the smaller players will either get acquired or carve out niches where they can get a defensible division or go out of business," Ledger said.
The survey showed that Nike retained a strong foothold despite discontinuing the Fuelband activity tracker, but this is misleading.
"I would attribute this to the fact that many retailers are liquidating inventory and it can be found at discounted prices through many channels. Also, Fuelband has been a strong product with younger consumers, many of whom wear it as much as a fashion piece as they do as a tool. Looking through the data, a strong majority of people who reported that they purchased Nike products in the last three months were younger (< 35), and more people were purchasing at the beginning of the survey period in May than at the end in June. I would expect their quarterly share to begin collapsing moving forward," Ledger said.
The network effect drives many of the purchases.
"If you are a consumer and you walk into Best Buy, you'll see a couple of these and you won't really know which one is best for you. But you have a neighbor with a Jawbone, so you get one of those. Or you saw something on Oprah about Fitbit. Advertising, network effect and to some degree mentions in The New York Times or Oprah are driving a lot of selection in the category," Ledger said.
Wearables make popular gifts
Endeavour Partners conducted a separate survey in May and asked 502 US adults how they obtained their devices. "For gifts, it's the perfect price point," Ledger said, with many activity trackers ringing in around $100. There's also a novel intrigue to the idea of a wearable, which makes it a good gift as well.
"We hadn't looked at this before. This was to test the hypothesis that a lot of people were getting them as gifts," he said.
Employers are also giving activity trackers to employees, with 6% of those surveyed saying that was how they obtained their device. Ledger said he expects this number to rise in subsequent studies as more employers are giving activity trackers to employees as part of a health incentive program.
A year ago, all activity trackers were bought online, and now only 22% are bought online. Ledger said the number of devices purchased in brick and mortar stores will continue to rise.
Overall, the survey showed that wearables are strong across all ages and genders. It's still a small subset of the population who use them, but even regionally there weren't big differences in usage. In the first survey, there were urban pockets were wearable use was stronger than in more rural areas. But not anymore.
"Wearables are so visible now. You see them on people, you see them in stores. The retail channels are exploding," he said.