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Report: Activity trackers aren’t dead, but smartwatches are closing in quickly

Fitness bands and other activity trackers have fared well despite the entrance of smartwatches into the race to occupy human wrists, but that’s about to change. As smartwatch ownership rises at a quick pace, activity tracker ownership has begun to plateau, according to a new report from The NPD Group.

Smartwatch ownership in the U.S. will reach 9 percent of the country’s adult (ages 18+) population by 2016, according to The NPD Group’s Connected Intelligence Wearables Forecast. Meanwhile, by the end of 2016, activity tracker ownership will peak at 32 million.

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NPD - smartwatches and activity trackers

“The smartwatch will clearly begin to take a bite out of the activity tracker market moving forward,” according to Eddie Hold, vice president of The NPD Group’s Connected Intelligence practice area. “The fact that the health and fitness apps on smartwatches are a key marketing focus will help draw consumers away from the simpler trackers.”

The report, which is based on an online survey of 5,000 U.S. adult consumers in the first quarter of this year, notes that activity trackers are also to blame for their plateauing ownership, as 40 percent of activity tracker owners stop using the device within six months of getting one.

Nevertheless, Hold sees an opportunity at the sports-focused end of the spectrum. Sophisticated activity trackers that are built to be rugged and waterproof while featuring GPS and heart rate monitoring capabilities will continue to see demand, he says. “And while we see the simpler fitness trackers potentially hitting a wall, these advanced devices will continue to drive adoption.”

Beyond the devices themselves, apps will play a significant role in the long-term stickiness of smartwatches and the growth of activity trackers, according to the report.

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A September 2014 report from telecom, media, and technology intelligence firm Analysys Mason expressed similar expectations. The firm noted that while smart bands accounted for 90 percent of smart wearable device sales in developed markets in 2014, this segment of the market would peak in 2016, thanks in large part to smartwatches with more robust functionality. By 2020, Analysys Mason expects the smartwatch market in developed regions to be worth $12.9 billion.

A separate report from Gartner found that 50 percent of consumers considering buying a smart wristband in 2015 will opt to purchase a smartwatch instead. Interestingly enough, Gartner expects worldwide shipments of smart garments to hit 26 million in 2016, more than the 24 million smartwatch units, 19 million smart wristband units, and 15 million units of other fitness monitors.

Gartner - wearable fitness devices, 2013-2016

Whether it’s said explicitly or not, the big driver for smartwatches this year and in the few years beyond will be the Apple Watch. Last month, research and consulting firm Strategy Analytics forecast that Apple would ship 15.4 million units of the Apple Watch worldwide in 2015, while all other smartwatch makers would ship a total of 12.7 million smartwatch units. In other words, Apple will claim 54.8 percent of all smartwatches shipped this year. The 28.1 million total smartwatches expected to ship in 2015 reflects a 511 percent surge from the 4.6 million smartwatches shipped in 2014.