August 28, 2017 by Canadian Underwriter
Research and advisory company Gartner, Inc. is forecasting that 310.4 million wearable devices will be sold in 2017, a 16.7% increase from last year.
Sales of wearable devices – including smartwatches, fitness trackers and other smart devices – will generate revenue of US$30.5 billion this year; of that, US$9.3 billion will be from smartwatches, Gartner said in a press release last week.
This year alone, 41.5 million smartwatches will be sold. “They are on pace to account for the highest unit sales of all wearable device form factors from 2019 to 2021, aside from Bluetooth headsets,” Stamford, Conn.-based Gartner said in the release. “By 2021, sales of smartwatches are estimated to total nearly 81 million units, representing 16 per cent of total wearable device sales.”
Angela McIntyre, research director at Gartner, said that smartwatches are on pace to achieve the greatest revenue potential among all wearables through 2021, reaching US$17.4 billion. She added that the overall average selling price of the smartwatch category will drop from US$223.25 in 2017 to US$214.99 in 2021 “as higher volumes lead to slight reductions in manufacturing and component costs, but strong brands such as Apple and Fossil will keep pricing consistent with price bands of traditional watches.”
By company, Apple will continue to have the greatest market share of any smartwatch provider. However, as more providers enter the market, the company’s market share will decrease from approximately one-third in 2016 to one-quarter in 2021. Other consumer electronic brands are only anticipated to sell about 15% of smartwatches in 2021, “because their brands do not have as strong an appeal as lifestyle brands for personal technologies,” Gartner suggested in the release.
Two sub-categories that Gartner expects to perform well are kids’ smartwatches and traditional watch brands, which will emerge as significant segments for smartwatches. Gartner expects kids’ smartwatches to represent 30% of total smartwatch unit shipments in 2021. These devices are targeted at children in the two to 13-year-old range, “before parents provide them with a smartphone,” Gartner said.
The other sub-category, which will account for 25% of smartwatch units by 2021, is fashion and traditional watch brands. “Luxury and fashion watch brands will offer smartwatches in an attempt to attract younger customers,” McIntyre said in the release. A final sub-category is represented by “startup and while-label brands,” which will account for 5% of smartwatch unit sales in 2021.
In 2017, 150 million Bluetooth headsets will be sold, an increase of 16.7% from 2016. Sales will increase to 206 million units in 2021, meaning Bluetooth headsets will remain the most sold wearable device through 2021. The growth in Bluetooth headsets is driven by the elimination of the headphone jack by major smartphone providers and by 2021, McIntyre said that she assumes that almost all premiums mobile phones will no longer have the 3.5 mm jack.
Head-mounted displays (HMDs) remain in their infancy as well, Gartner said, and will account for only 7% of all wearable devices shipped this year. They will not reach mainstream adoption with consumers or industrial customers through 2021, the release said. “Current low adoption by mainstream consumers shows that the market is still in its infancy, not that it lacks longer-term potential,” McIntyre added.
Near-term opportunities for virtual reality HMDs among consumers are with video game players. Workers will also use them for tasks such as equipment repair, inspections and maintenance, but also in warehouses and manufacturing, training, design, customer interactions and more, Gartner said. Theme parks, theatre, museums and sports venues will purchase HMDs to enhance customers’ experience in interactive attractions or movies, and add information and supplemental images at sporting events.