The Takeaway: Wearables still have 3 hurdles to clear

With the Apple Watch now showing up on wrists and Android Wear devices arriving regularly, it seems the wearables market is set for take-off. But storm clouds lurk.

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With the Apple Watch now out, Android Wear devices arriving regularly and Apple's big developer conference coming up next week -- where we're likely to hear more about the Watch and mobile payments -- it's clear that wearables have arrived.

But will they succeeed?

Despite the Apple Watch's splashy arrival in April, data from IDC (and recent polling) raises questions about whether the public is ready to adopt wearable devices in big numbers. That data points to three main issues that could undermine the wearables market -- or at least slow its growth in the short term.

IDC research released yesterday for the first quarter of the year offered these insights into what's going on with wearables:

  • In the first three months of the year, Fitbit led the market. (The Apple Watch didn't arrive until the first quarter ended.) IDC analyste Ramon Llamas pointed out that the Fitbit is inexpensive, with prices starting around $100, and more importantly, highly focused on fitness uses. That last point is important, since "value" to users is paramount to success. A devide that does many things in a mediocre way -- or that someone can do already with their phone -- is less valuable than a device that does a limited number of things well.
  • Despite a push for mobile payments by Apple (with Apple Pay) and Google (with Android Pay), it's not at all clear that users will find them reasaon to go out and spend hundreds of dollars on a wearable. One IDC analyst predicted a "long slog" toward adoption. To change that equation, Apple is expected next week to roll out a rewards program with Apple Pay; Google plans to do the same with its own service.
  • The big enchilada involves privacy. Wearables can collect a lot of data about the users, everything from location to spending habits to health and fitness measurements. That data is valuable, even when anonymized and collected in bulk -- and how it is stored and shared should concern all users, said Llamas. Privacy concerns, including the use of biometrics to authenticate mobile payments remain a red flag for many users, especially in the U.S.

Despite those issues, analysts agreed that growth seems virtually certain now that Apple is a major player. But widespread adoption of wearables will depend on how quickly users find value in them, comfort in using mobile payments and confidence that they're secure.

With reports by Matt Hamblen at Computerworld.

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