Now smarter, wearable device market poised for resurgence in 2019
It seems wearable devices are everywhere today, but what the typical consumer likely doesn’t know is that the market for them has actually decelerated during 2018.
On Thursday, the International Data Corporation released its latest Worldwide Quarterly Wearable Device Tracker data, showing that the global market for wearables is forecast to ship 122.6 million units in 2018, up 6.2% from 2017. While that growth is healthy, it means 2018 will be the first year of single-digit year-over-year growth for the wearables market since IDC began tracking it.
But there is good reason for the slowdown. IDC, as well as other recent news coverage of this topic, credit the smaller increase to continued softness in demand for basic wearable devices—defined as devices that are capable of running third-party applications. Meanwhile, the market for smart wearables will more than make up it, with IDC expecting double-digit overall growth to resume in 2019 and sustain through at least 2022, when total shipment volumes are forecast to reach 190.4 million units at a compound annual growth rate of 11.6% over that five-year stretch.
“The slowdown in the worldwide wearables market is a sign that this is a market in transition instead of a market in slowdown,” said Ramon T. Llamas, research director for IDC’s Wearables team. “Vendors are slowly moving beyond first-generation devices and experiences, bringing together an ecosystem of partners and applications for improved user experiences that reach beyond step counting. The wearables of tomorrow will play a more prominent role in communication, digital healthcare, home IoT, and enterprise productivity that will make last year’s wearables look quaint.”
Another report by Market Research Engine forecasts the global wearable devices market will hit US $51.5 billion by 2022 at a CAGR of 15.5%.
IDC forecasts smartwatch shipped units volume to soar 38.9 percent YoY in 2018 and will grow at CAGR of 19.5 percent by 2022—accounting for nearly half the entire wearables market by then. Meanwhile, wristband wearables volume growth is expected to remain flat through the same time period, with numerous vendors exiting the space in the years ahead and mostly advanced wristband devices remaining.
Expected to grow fastest is earwear, which IDC defines as devices that feature a plus-one functionality beyond audio. “Already earwear has expanded to include fitness tracking and coaching and real-time language translation, and in the coming years it should not be difficult to imagine a smart assistant tucked into a user’s ear,” IDC stated.
As the smartwatch market matures, IDC expects far greater diversity in design, features, brands and price points. It notes how Fitbit’s Versa product—launched this past April—was one of the first mass market smartwatches to price below $200. IDC said it also expects growth from new products as kid’s brands, fashion brands, and sports brands hit retail shelves, while the third generation of WearOS watches are expected to start gaining traction this holiday season.
“Through all these changes there will still be an appetite for basic wearables,” noted Llamas. “Wristbands will continue to play a significant role in the wearables market, offering simpler and less expensive solutions than their smartwatch counterparts. We also expect these devices will bring a more smartwatch-like experience to the table. Meanwhile, clothing and earwear will post market-beating growth with use cases that go well beyond their primary functions.”
Apple’s annual Apple Event—held Wednesday at the company’s headquarters in Cupertino, CA—the consumer technology giant unveiled its newest Apple Watch, which received arguably the most praise out of all products shown during the event. The most notable new feature on Apple Watch 4 is its ability to take an electrocardiogram (ECG), which measures the electrical activity in your heart and can identify the common heart condition atrial fibrillation that typically requires a visit to the doctor. Providing an ECG in about 30 seconds at reportedly 98% accuracy, the feature is approved by the Food and Drug Administration.
“Apple’s new watch will appeal to cardiac patients thanks to its approval from the FDA and AHA (American Heart Association), and its refreshed watchOS5 provides reason for owners of older versions to upgrade,” IDC said.
Such advanced health-monitoring features, along with more in-depth fitness tracking, and enhanced apps for navigation, messaging, making/receiving calls, and more have smartwatches primed for a market surge.
I, myself, wear a “basic” device everyday—a Fitbit Charge 2—while my wife wears an Apple Watch 3. Neither of us plans to upgrade for at least another year.