More consumers choosing smartwatch over activity trackers, NPD Group says

PORT WASHINGTON, N.Y.  – With the introduction of new devices, new features and updates to hardware and operating systems alike, 2017 has brought a number of changes to the smartwatch market.



As of June 2017, nearly 9% of U.S. consumers aged 18 and over owned a smartwatch, up almost 1.5 percentage points from the six months prior.



“Rumors of the smartwatch’s demise have been greatly exaggerated and we expect to see stronger growth in the next 18 months, compared to 2016,” stated Weston Henderek, director, Connected Intelligence. “Many of the early growth projections for the smartwatch were, simply put, unrealistic. But in reality, a 9% ownership level is a pretty healthy start for the market after just a couple of years. We expect the next round of product upgrades will lead to more first-time smartwatch purchases, as well as upgrades for those with existing devices.”



Currently, smartwatch ownership is controlled by the millennial generation, which has 13% ownership penetration. However, as use cases broaden, shifts in smartwatch ownership will follow. In fact, the male/female split in the category is now the lowest it has ever been at 60% male – indicating a more mainstream audience. Additionally, despite higher pricing than activity trackers, smartwatch ownership is highest among the lowest income category (less than $45,000 per year), with 34% of smartwatch ownership penetration.



“While strong ownership in the lowest income category may seem counter intuitive, it is likely driven by a large number of buyers in the service industry who need a device to check incoming notifications when they can't reach for their phone,” Henderek said. “Overall, increased features and functionality was the No. 1 reason respondents chose a smartwatch over an activity tracker. Some of what we are seeing demonstrates a natural evolution of the device as a home control hub on the wrist, for one, and continued evolution of product capabilities will be key to winning over consumers.”



According to the latest WEAR Report Industry Overview and Forecast from NPD’s Connected Intelligence, growth in the category will continue, with a nearly 60% ownership growth expected from Q2 2017 through Q4 2018, driven in large part by anticipated new product introductions from market leaders.



This forecasted growth will result in nearly 15% of U.S. consumers aged 18 and over owning a smartwatch by 2019.



Increasing features and capabilities are key differentiators for smartwatches, which will further contribute to their growth over the forecast period. While use cases such as receiving notifications/texts, activity tracking and news updates are still the most highly reported among smartwatch owners; use cases such as controlling music, using as a device to control pictures and video and home automation are growing.

In fact, 15% to 21% of smartwatch owners are already utilizing their devices for those types of activities daily.