U.S. smartwatch market to grow 60% through 2018, NPD predicts

The U.S. smartwatch market is finally beginning to get legs, according to a new forecast from NPD Group, and will enjoy nearly 60% growth by the end of 2018.

The market research firm said nearly 9% of U.S. adults owned a smartwatch as of June 2017, marking a modest uptick of 1.5% from the previous six months. But new devices, features and hardware and software updates will catalyze growth, NPD predicted, and nearly 15% of U.S. adults will own a smartwatch by 2019.

“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,” said Weston Henderek, NPD’s director of Connected Intelligence, in a press release. “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.”

Indeed, the smartwatch segment has fallen far short of the expectations of some industry onlookers who predicted early sales could mirror those of smartphones or tablets. Analysts say a lack of compelling apps and use cases are a major problem for the market, which is why simple fitness trackers have dominated their more sophisticated counterparts.

But while millennials account for a disproportionately high percentage of smartwatch owners, NPD said the gadgets’ mainstream appeal will drive success over the next several years. Sixty percent of smartwatch owners are male—the narrowest gender split the market has seen—and 34% of smartwatch owners generate less than $45,000 a year.

“While strong ownership in the lowest income category may seem counterintuitive, 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 opined. “Overall, increased features and functionality was the number one 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.”