Consumer Electronics

Smartwatch 5-Year Forecast Says Sales to Double

The global market for wearable devices grew by more than 10% in 2017 and is on track to rise by another 13.2% in 2018 to a total of 132.9 million smartwatches, fitness trackers and watchbands. The forecast, released Tuesday by International Data Corp. (IDC), calls for a compound annual growth rate (CAGR) of 13.4% through 2022, when 219.4 million wearable devices will be shipped from their manufacturers. That’s an increase of 65% over the five-year period for all wearables, including a 93% jump in smartwatch shipments.

This is good news for Apple Inc. (NASDAQ: AAPL), which shipped more than half of all smartwatches last year. Smartwatches are also the wearable product with the highest average selling price and are expected to account for about two-thirds of wearables dollar value.

Competitors like Fitbit Inc. (NYSE: FIT), Garmin Ltd. (NASDAQ: GRMN) and Alphabet Inc. (NASDAQ: GOOGL), with its Wear OS, are also expected to gain more traction through the forecast period.

IDC senior research analyst Jitesh Ubrani said:

Consumers are finally starting to understand and demand the utility of a smartwatch. At present, fitness uses lead by a mile but mobile payments and messaging are starting to catch on. The addition of cellular connectivity is also starting to resonate with early adopters and looking ahead the emergence of new use cases like music streaming or additional health sensors will make cellular connectivity pivotal to the success of the smartwatch.

Research director Ramon T. Llamas added:

The appetite for wristbands and basic watches will not go away. Both products will enjoy sustained popularity as users’ first wearable thanks to their simplicity and lower price points and will reach new audiences as part of digital health solutions (wristbands) or for those who want wearable technology but prefer the traditional look and feel of a hybrid watch.

The product category that IDC forecasts to grow fastest is what the firm calls “earwear” and what the rest of us call headphones. The CAGR for earwear over the five-year period is 48%, with shipments rising from 2.8 million units (2.1% share of wearables market) to 13.3 million units in 2022 (6.0% share).

Smartwatch share rises from 32.8% in 2018 to 38.3% in 2022, with shipments rising from 43.6 million units to 84.1 million units and a CAGR of 17.9%.

Basic wristbands currently account for 47.7 million shipments (35.9% share), but that total is forecast to rise to only 48.2 million shipments by 2022 (22% share) for a CAGR of just 0.3%.

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