Why Apple Inc. Doesn't Care Most Wearable Tech Ends Up As Junk

By Markets Fool.com


Source: Apple

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It is hard to ignore the numbers. After about six months of use, one-third of U.S. consumers cast aside their wearable devices, never to be used again, according to a report from Endeavour Partners. Furthermore, more than half of Americans who have owned a wearable activity tracker no longer use it.

Mat Honan wrote in a Wired article last month that he has a junk drawer full of wearables that he never bothered to recharge "because they didn't end up doing anything that my phone can't already do."

But as discouraging as all of that information is against the upcoming Apple Watch, the Cupertino company is unlikely to lose much sleep over the reports.

And it shouldn't.

Acceptance of wearable technology is growing. Acquity Group says that in the next five years, about 23% of U.S. consumers expect to own a smart watch. Admittedly, that is an optimistic forecast, but sentiment is moving in that direction.

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Source: Apple

A recent report by Forrester Research notes that, "Consumer interest in wearables is growing -- particularly among those already part of the Apple ecosystem." Its research found that 7% of U.S. adults are ready to purchase an Apple Watch, and 42% are open to the idea of buying a wrist-worn device.

So, maybe the problem is not the idea of wearable technology itself (though I've wondered as much for some time) but rather the specific devices that are currently on the market.

To use a tired and tattered example, MP3 players existed well before the iPod debuted, yet they never had anywhere near the mass adoption and sales success that Apple devices enjoyed.

I had an early MP3 player with a very small screen, terrible user interface, and a clunky physical design. That device ended up in my junk drawer like so many of today's wearables. Yet, I still wanted a good MP3 player -- and so did millions of other people.

The Apple Watch should have a similar story. The interest in wearable technology is there, but many companies have lacked the correct execution thus far. To Apple, the fact that people have discarded another company's wearable tech after a few months is irrelevant.

Projections for first-year Apple Watch sales are all over the board, from the low end of 10 million all the way up to 40 million, and of course, all of those are just estimates. Predictions aside, it is important to remember that Apple is playing the long game.

"Apple Watch uptake will evolve, with early adopters, motivated by excitement, biting first and a second wave of mainstream consumers -- who can see and experience the benefits of the device -- buying next,"Anjali Lai wrote in a Forrester blog post recently.

Too niche. Too expensive. Massively successful. Source: Apple

Do I think the Apple Watch will be a massive success right out of the gate? Nope. I think the price tag along with the initial "what would I need a smart watch for?" mindset will keep it from hitting the highest analyst projections.

But low-end estimates for the wearable tech market see 530 million devices by 2020, meaning there is plenty of time to see the Apple Watch become a major success.

A few years ago, Business Insider tracked down a quote from a New York Times article that was published the day the iPod went on sale. PJ McNealy, an analyst for Gartner had this to say about it:

It's a nice feature for Macintosh users, but to the rest of the Windows world, it doesn't make any difference.

Many people thought the iPod was too niche (it only works with Apple computers!), too expensive ($399!), and other devices like it already existed.

So, forgive Apple for not listening to the smart watch naysayers. The company has heard this tune before.

The article Why Apple Inc. Doesn't Care Most Wearable Tech Ends Up As Junk originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and Gartner. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.