With so much hype surrounding smartwatches and wearables in general, one could hardly be blamed for thinking the industry is about tap a new goldmine, but the numbers are not encouraging.
Juniper Research now estimates smartwatch shipments will hit 100 million by 2019. The firm expects several high-profile products to launch over the next year or so, helping boost mainstream awareness.
However, the figures are anything but encouraging.
Looking for the killer app
The report, titled 'Smart Watches: Market Dynamics, Vendor Strategies & Scenario Forecasts 2014-2019', expects growth will decelerate from 2016 onwards. The first batch will ride the hype, but moving forward it won't do much for mainstream adoption.
However, the forecast also examines the possibility of sustaining 2014-2015 growth in the long term.
If consumers discover a 'key use case' or cases for smartwatches, backed by more product releases on the back of higher demand, higher growth could be sustained. In plain English, if people actually find a use for smartwatches, they will see more growth.
Unfortunately the case is hard to make at this point. Smartwatches face a number of hardware limitations and software support is still limited, which means they are not very useful at the moment. Juniper expects more vendors to integrate GPS, NFC and other technologies, but the downside is that smartwatches are not expected to become very cheap. The firm estimates premium branding and high functionality to keep prices at $200+ until the end of the decade.
Europeans not too keen
One possible application that could generate more demand comes in the form of mobile payments. Apple Pay is coming to the Apple Watch, but the service will be limited to the US for quite a while and Apple won't have an easy time launching it in other markets, where it enjoys a much lower market share.
The problem with mobile digital wallets is that they have not taken off yet. What's more, new research indicates that Europeans are not sold on the idea of smartwatch wallets.
The survey, carried out by German market research firm GfK, found that just 20 percent of Germans and 27 percent of Britons are interested in contactless payments built into a watch. However, Chinese and American consumers are more open to the idea, with 40 and 54 percent saying they are interested.
Most consumers said they are interested in health applications and many said they would store identification data on their smartwatches.