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Terapeak Trends: Wearable Technology the Next Big Thing?

By Aron Hsiao  on March 07, 2014

Various kinds of wearable technology have been in the news for a couple of years now—everything from the long-lived Apple iWatch rumors to the gradual spread of much-discussed Google Glass headsets. But "wearable technology" press coverage this year has been more breathless, more extensive, and more product-oriented than it was in the past. One look at the Google Trends search line for "wearable technology" shows why—consumers are actively looking for it.

The Google search trendline for "wearable technology" shows 2013 to be a breakout year. (Image: Google)

But does it really sell? It's been seven months since our last look at the market for fitness and activity trackers and nearly a year since our last look at smart watches. How have things changed since then? Given the focus on activity trackers seen at the Consumer Electronics Show (CES) earlier this year and media buzz about wearables that's continued since then, we though it was time to take another look.

An Emerging Market

The first thing that's clear about the wearables market now as compared to the wearables market a year ago is that it's a much, much more complicated place. There are many more makes, models, and categories of wearable gadgets driving consumer sales now than there were then, and new ones seem to arrive by the day.

At the same time, the largest online marketplaces haven't quite caught up to the trend. On eBay, for example, there remains no one clear category for digital fitness wearables (as opposed to old-fashioned pedometers and similar devices), nor for wearable headgear of the Google Glass and Oculus Rift variety.

This disconnect—the lack of clear categories for new kinds of devices and the sense that they're really becoming needed—suggests that an important new market might be emerging as consumer wearable technologies become affordable and take hold.

It also makes the compilation of data rather difficult—as things stand now, sellers describe these items in different ways and list them in a variety of categories. In combination with the rapidly growing list of actual devices sold under these conditions, these circumstances make for messy data. For our purposes, this is okay—we just want to see whether or not sales are growing and get some sense of the scale involved.

Because of the complexity of the wearables market, we've been selective. Our analysis sticks with the biggest categories and most prominent products in collectibles: activity trackers, smart watches, and Google Glass.

Activity and Fitness Trackers

Even the U.S. Army is buying into fitness trackers. Here, a soldier holds a Fitbit Flex and related training manual. (Image: David Vergun / U.S. Army News Service / Public Domain)

Activity or fitness trackers are wearable devices that gather data about wearers' activity throughout the day, then make this data available online or through smartphone apps. They're designed to help wearers to gain an understanding of just how much exercise they're getting, how far they're walking in a day, how well they're sleeping at night, and other similar kinds of data.

While no clear eBay category exists for these kinds of devices, a quick check shows that a significant portion of them are listed in one eBay category:

    Sporting Goods > Exercise & Fitness > Gym, Workout & Yoga > Monitors & Pedometers

This category can't give us a perfectly clear view of the market, since it also houses other, more primitive kinds of devices, but with 67 percent of listings for "fitness tracker," 78 percent of listings for "activity tracker," 96 percent of listings for prominent brands like "Fitbit," and so on appearing in this category, it's a good bet that any significant increases in sales will be evident. And evident they are:

The year's trends for fitness trackers show strong growth

When we looked at this category last July, an upward trend already seemed to be in evidence—but the peaks from that period are dwarfed by recent volume peaks, which show are double or greater the volume. At the same time, the number of sold listings has increased steadily and shows few signs of decline following the holiday selling season or at present.

With dollar volume of $6.8 million dollars over the last nine months and the timing of the category's recent growth seeming to coincide with the wearables boom of 2013, the opportunity for sellers in this category may be significant.

Smart Watches

The iWatch is rumored to be a smart watch with activity monitor features. Is Apple's impeccable timing about to result in another blockbuster product? (Image: Google)

Smart watches have become prominent enough as a group of products that in summer 2013 eBay decided to give them their own category. Unfortunately, because the category is both hot and new, eBay doesn't enable high-level research on the category directly. We've "cheated" a little bit, however, by browsing through listings in the category and noting that we can get practically all of them with a careful selection of keywords:

android, iphone, ios, sony, samsung, bluetooth, pebble, omate, smart, watch, smartwatch, cell, phone, galaxy, gear, martian

With this in mind, we compiled monthly data for the last nine months using a product search, limited to the "Smart Watches" category, for listings containing any of these keywords. For the months when the category didn't exist or was new, we searched eBay as a whole, but for the required term "smartwatch" in combination with any of the keywords in the list. The results, once again, show significant growth:

Smart watch sales have skyrocketed over the last nine months

Smart watches were a niche product prior to the fall of 2013, but since then have exploded in popularity amongst shoppers. The result is a trend line that shows no hint of a post-holiday slowdown after the most recent holiday shopping season—as well as $2.9 million in sales over the last nine months.

Google Glass

There's a lot of debate about Google Glass as a social phenomenon, but as a product, it's doing well. (Image: Loic Le Meur / CC-BY-2.0)

Because Google Glass has been a product of tremendous interest for press outlets of all kinds, and because it's widely assumed to be a harbinger of things to come in the future, we decided to let Google Glass stand in for wearable headsets and vision systems of all kinds.

Since there's no clear category for Google Glass, either—at least not one relatively free of other products—we did a product search for the phrase "Google Glass" across all categories, excluding items with sale prices below $900. The result is a body of listings that are made up entirely of Google Glass units. Here's how Google Glass activity shakes out over the last nine months:

Strong holiday growth, now settling to a plateau at new highs

What see here is a clear expansion of the market through the holiday season, followed by a decline afterward that appears to be slowing to something of a plateau—a much higher plateau (by 2-3 times in volume terms, and by more than 4 times in terms of units shipped) than was seen prior to the most recent holiday shopping season.

A closer look at these charts also reveals something else—unit sales have increased and remain much higher on a percentage basis than dollar volume, something that's easy to miss given the similar shapes of the charts. What this means in practice is that as more and more units have sold, prices have come down steadily—from an average of $5,600 per unit early last summer to an average of $1,617 last month.

What was once an exotic luxury item is quickly finding its way to price levels within reach of high-end consumer electronics consumers. At the same time, supply of Google Glass units remains somewhat constrained. If prices continue to fall, and availability picks up, wearable headsets and vision systems could become consumer items sooner than we might have imagined just a year ago.

Wearables Are More Than Hype

Just nine months of recent data across a limited cross-section of the wearables product market has revealed:

  • Very large volume and unit increases in recent months

  • Clear upward trends

  • Aggregate sales volume of over $14 million

  • Many thousands of units shipped

In short, the age of consumer wearable technologies appears to be here, and to have arrived sometime late during the summer or early during the fall of 2013.

Now it's up to shoppers and sellers to figure out just what wearables categories will come to dominate the market, and within each, which brands, products, and capabilities will become consumer favorites.

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