LAS VEGAS -- At International CES this week, more than 500 vendors are showing off wearable computing gear of some flavor or other.
Among the 569 companies officially listed on the CES website, some are pushing silicon chips for embedding in clothes and shoes while others are promoting wearable computing accessories. Vendors are displaying commercially available smartwatches and smart glasses. Others are showing how wearables have become smarter by coupling data about individuals with enormous data sets in the cloud.
Given the normal course of modern technology, about 90% of these companies will fade away or give up on their wearable products within three years and move on to the next big thing.
That doesn't mean wearable computing will go away. Even if just 10% of the vendors at CES stick with their creations, that will mean more than 50 companies remain active in wearable computing. In the future, others will surely enter the space.
What CES 2015 will show is that wearables -- and smartwatches in particular -- will begin to grow in popularity.
"Wearable demand is greater than you think," Forrester analyst J.P. Gownder wrote in a December note to chief marketing officers. "Setting aside wearables hype -- and anti-wearables hype -- quantitative data shows that people and businesses demonstrate strong demand for wearables."
Smartwatches alone have advanced considerably since last year's CES. Samsung has five different models, including the most recent $350 Gear S, which has a 2-in. curved display and voice calling with support from various wireless networks. Earlier, Google's Android Wear OS inspired the Moto 360 smartwatch and the LG G Watch. Microsoft has its own smart Band, a kind of fitness-focused smartwatch. And Intel recently engineered the MICA as a gemstone-embedded $495 smart bracelet that works over the 3G AT&T cellular data network without the need to connect to a smartphone.
Apple Watch: The one to track
The big elephant in the room is Apple, which has promoted the Apple Watch for release sometime in 2015, probably the second quarter. While Apple won't officially exhibit at CES, it is again expected to dominate attention. The big question being debated on investor blogs is whether Apple will sell as few as 3 million or as many as 30 million Apple Watches in the first year of sales.
Given Apple's success with the iPhone and the iPad, the Apple Watch is the tech product to keep an eye on in 2015.
If Apple sells 30 million watches in 2015, that would account for 75% of the global forecast of 40 million smartwatches overall that Gartner predicts will be sold for the year. But the forecasts for Apple Watch and other smartwatch models are all over the map: Research group FutureSource predicts 20 million smartwatches will be sold in 2015, half of Gartner's forecast. In 2014, Gartner said 10 million smartwatches were sold, and that the number will reach 60 million in 2016.
Despite all the attention, some diehard techies wonder why smartwatches and other wearables matter, some having called them a lifestyle and fashion trend that won't have staying power. They point to the wide variations in analyst forecasts as support for their point of view. A number of analysts suggest that smartwatches will matter a lot -- probably more than most people have guessed -- but not right away. In addition to having multiple consumer uses, smartwatches will matter for workers seeking greater productivity and for marketing officers in companies that want to design smartwatch apps to better engage with customers.
Last year, the smartwatch became more fashionable and less clunky, but it also became a quick way for a executives to quickly get alerts of an important email or call, without the need to dig into a pocket, purse or briefcase to find a smartphone. There's been a recognition that a smartwatch can be a smarter, more powerful and more convenient pager-like device that alerts a doctor to a patient's emergency or a stockbroker to a sudden market shift for a key stock.
In 2015 and beyond, customers are going to demand more smarts from these devices, even better looks and pricing that's well below $300. "Almost anything is on the table, and all the software and apps for the wearable hardware is what will matter most," said Ramon Llamas, an IDC analyst.
One of the biggest pushes in the past year has been on sales of dozens of different fitness wrist bands, such as those from FitBit and Jawbone. Some of these wrist bands have GPS tracking and Bluetooth connections to smartphones where more of the functions reside for monitoring workouts and the user's health, such as heart rate and sleep functions. Fitness wearables are expected to whet the appetite for more functions inside smartwatches and other smart wearables.
The 10% threshold
In a 2014 survey, Forrester found that 10% of 4,556 U.S. adults said they had used a wearable device to track daily activity. That 10% traditionally represents a key threshold for future growth in product adoption. While Google Glass might be considered experimental, "Entering 2015, wearables are poised to take off," Forrester's Gownder said. "People are intrigued by the prospect of getting a wearable device and are tired of pulling a smartphone out of a pocket to get information."
Because of Apple's reputation with its previous products, it has influence in any category it enters. "We absolutely believe the Apple Watch is legitimizing the entire wearables category," Gownder said.
"There were smartphones before the iPhone and tablets before the iPad, but what Apple does is leverage the ability to educate consumers about new categories and shows us what matters and gives a category legitimacy," Gownder said. "Apple will make a splash in 2015 and legitimize the category. When we look back years from now, it will be a watershed year for the mass market for wearables."