Smartwatch Sales To Explode In 2016 And Beyond

by CXOtoday News Desk    Dec 18, 2015

smartwatches

The global market for wearable technology is seeing a surge, with research firm IDC predicting a total of 111.1 million units of devices to be shipped in 2016, up nearly 45 percent from this year. The IDC report suggests that number to double by 2019. As smartwatches begin to mature, these devices will soon make up a greater percentage of the market than fitness bands.

One of the most popular types of wearables will be smartwatches, reaching a total of 32.3 million units shipped in 2016, up from the 21.3 million units expected to ship in 2015. By 2019, the final year of the forecast, total shipments will reach 88.3 million units, resulting in a five-year CAGR of 42.8%.

“In a short amount of time, smartwatches have evolved from being extensions of the smartphone to wearable computers capable of communications, notifications, applications, and numerous other functionalities,” noted Ramon Llamas, Research Manager for IDC’s Wearables team. “The smartwatch we have today will look nothing like the smartwatch we will see in the future. Cellular connectivity, health sensors, not to mention the explosive third-party application market all stand to change the game and will raise both the appeal and value of the market going forward.

“Smartwatch platforms will lead the evolution,” added Llamas. “As the brains of the smartwatch, platforms manage all the tasks and processes, not the least of which are interacting with the user, running all of the applications, and connecting with the smartphone. Once that third element is replaced with cellular connectivity, the first two elements will take on greater roles to make sense of all the data and connections.”

Needless to say, Apple’s smartwatch will be the market leader for the foreseeable future. This year shipments of wearables will tally up to about 80 million. Of that total, about 20.1 million, or one-quarter, will be smartwatches, as opposed to simpler fitness trackers. IDC predicts Apple will own the greatest percentage of the smartwatch market (61%) with shipments of 13 million Apple Watches. “Very quickly, watchOS has become the measuring stick against which other smartwatches and platforms are compared. While there is much room for improvement and additional features, there is enough momentum to keep it ahead of the rest of the market,” the report said.

Android Wear will be a distant second even as its vendor list grows to include technology companies (ASUS, Huawei, LG, Motorola, and Sony) and traditional watchmakers (Fossil and Tag Heuer). The user experience on Android Wear devices has been largely the same from one device to the next, leaving little room for OEMs to develop further and users left to select solely on price and smartwatch design.

Smartwatch pioneer Pebble will cede market share to AndroidWear and watchOS but will not disappear altogether. Its simple user interface and devices make for an easy-to-understand use case, and its price point relative to other platforms makes Pebble one of the most affordable smartwatches on the market.

Samsung’s Tizen stands to be the dark horse of the smartwatch market and poses a threat to Android Wear, including compatibility with most flagship Android smartphones and an application selection rivaling Android Wear. Moreover, with Samsung, Tizen has benefited from technology developments including a QWERTY keyboard on a smartwatch screen, cellular connectivity, and new user interfaces. It’s a combination that helps Tizen stand out, but not enough to keep up with AndroidWear and watchOS.

There will be a small, but nonetheless significant market for smart wristwear running on a Real-Time Operating System, which is capable of running third-party applications, but not on any of these listed platforms. These tend to be proprietary operating systems and OEMs will use them when they want to champion their own devices. These will help within specific markets or devices, but will not overtake the majority of the market, said IDC.

Top Five Smartwatch Operating Systems with Shipments, Market Share and 5-Year CAGR Growth, (Units in Millions)

                                         
Operating System      

2015 UnitShipments

     

2015 MarketShare

     

2019 UnitShipments

     

2019 MarketShare

     

2015-2019CAGR

Android       0.4       2.1 %       1.1       1.2 %       25.8 %
Android Wear       3.2       15.2 %       34.3       38.8 %       80.5 %
Linux       0.2       0.9 %       1.1       1.2 %       54.5 %
Pebble       1.8       8.6 %       2.3       2.6 %       5.8 %
Tizen       0.8       3.8 %       1.9       2.2 %       23.8 %
watchOS       1.7       8.2 %       2.5       2.8 %       9.5 %
RTOS       13.0       61.3 %       45.2       51.1 %       36.5 %
Total      

21.3

      100.0 %       88.3       100.0 %       42.8 %

Source: IDC Worldwide Quarterly Wearable Device Tracker, December 2015