Fossil’s push into smartwatches is not helping the company financially. Shares dropped nearly 20% this week to a near-decade low after the company confessed to an abysmal outlook for 2017.
Fossil began its aggressive entrance into the infantile smartwatch market in 2015 in a bid to compete with the likes of Fitbit and Apple. And since then, the watchmaker has been struggling to generate profit from the low-margin business.
It seems that few are seeing meaningful success in the smartwatch market—a product category that has failed to meet its own hype, instead serving as a niche-filler for hobbyists and the curious. According to data from the International Data Corporation’s Worldwide Quarterly Wearable Device Tracker, smartwatch sales decreased 50% year-over-year.
“It has become evident that at present smartwatches are not for everyone,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers.
Indeed, some companies, such as Lenovo, have decided to simply exit the market. Others, meanwhile, face extinction and get scooped up by those still determined to make a business out of wearables. Even Fitbit, a pioneer in the space, is struggling.