Wearables Market Entering A New Phase, Says IDC

by CXOtoday News Desk    Jun 28, 2017

wearables

The wearables market is entering a new phase globally as well as in India. As the wearables market transforms, total shipment volumes are expected to maintain their forward momentum. According to data from the International Data Corporation (IDC), vendors will ship a total of 125.5 million wearable devices this year, marking a 20.4% increase from the 104.3 million units shipped in 2016. From there, the wearables market will nearly double before reaching a total of 240.1 million units shipped in 2021, resulting in a five-year CAGR of 18.2%.

Ramon T. Llamas, research manager for IDC’s Wearables team said, “Since the market’s inception, it’s been a matter of getting product out there to generate awareness and interest. Now it’s about getting the experience right – from the way the hardware looks and feels to how software collects, analyzes, and presents insightful data. What this means for users is that in the years ahead, they will be treated to second- and third-generation devices that will make the today’s devices seem quaint. Expect digital assistants, cellular connectivity, and connections to larger systems, both at home and at work. At the same time, expect to see a proliferation in the diversity of devices brought to market, and a decline in prices that will make these more affordable to a larger crowd.”

“It’s not just the end users who will benefit from these advanced devices,” said Jitesh Ubrani senior research analyst for IDC Mobile Device Trackers. “Opportunities also exist for developers and channel partners to provide the apps, services, and distribution that willl support the growing abundance of wearables. From a deployment perspective, the commercial segment also stands to benefit as wearables enable productivity, lower costs, and increase ROI in the long term.

Of course, not all segments of the market will experience uniform growth levels. The bulk of the shipment volume and growth in 2021 is expected to come from watches, and in particular smart watches. In 2021, watches are expected to command a 67% market share overall. However, while basic watches will maintain a relatively stagnant market share of around 35% from 2018 to 2021, smartwatches will continue to increase in popularity and will account for nearly 33% of the market by 2021. If these trends hold, we can expect smartwatches to take over basic watches within the decade.

Clothing and Eyewear are both also set for considerable growth in the upcoming years, at a CAGR of 76.1% and 39.7% resulting in a 9% and 1.7% market share, respectively by 2021. These segments are being pioneered by products such as Google and Levi’s upcoming Project Jacquared-enabled jacket and Samsung Gear Icon X Earwear.

On the flip side, the popularity of wristbands is set to fall quite drastically, with negligible growth in shipments to about 52.2 million by 2021. This would represent only 21.7% of the market in 2021. Just not too long ago they were neck to neck with watches, but that is set to change. Fitness/GPS bands now find themselves in a similar position as digital mp3 players did when the smartphone revolution came about. The expanding and often overlapping feature set of newer generation smartwatches is slowing rendering fitness bands obsolete.

Top Wearable Devices by Product, Volume, Market Share, and CAGR

Product

Shipment Volume 2017

Market Share 2017

Shipment Volume 2021*

Market Share 2021*

CAGR (2017-2021)*

Watches

71.4

56.9%

161.0

67.0%

26.5%

Wristbands

47.6

37.9%

52.2

21.7%

1.2%

Clothing

3.3

2.6%

21.6

9.0%

76.1%

Earwear

1.6

1.3%

4.0

1.7%

39.7%

Others

1.6

1.3%

1.4

0.6%

-16.0%

Total

125.5

100.0%

240.1

100.0%

18.2%

Source: IDC Worldwide Quarterly Wearables Device Tracker, June 21, 2017

Meanwhile, an IDC report earlier this month predicts the wearable market in India to grow at a double-digit in CY Q2 2017, according to the latest IDC. What’s driving this market is new entrants like Titan, with aggressive marketing that entered Indian wearable market in March. To further intensify competition, few new vendors primarily China-based are expected to make inroads into Indian wearable market especially in sub US$50 segments, said the analyst firm.

While basic wearables accounted for almost 90 percent of total wearable shipments in Q1 2017, Celso Gomes, Associate Market Analyst, Client Devices, IDC India said “In addition to the low entry price of basic wearables, consumers are now getting better value from these devices as the category now offers advanced features. Features such as heart rate, sleep monitor and among others are soon becoming the must-have features in basic wearables, even in entry level (US$50) segments.”

Less than US$50 segment continues to dominate the category accounting for 78.6 percent of total wearable shipments, led by GoQii followed by Xiaomi. “New entrants like Titan, with aggressive marketing, have entered Indian wearable market in March further increasing the competition in this highly cluttered entry-level segment,” adds Gomes.

The offline share of wearables shipments stood at 36.2 percent in Q1 2017 up from 24.3 percent over the same period last year. The offline share has improved over the last couple of quarters and is expected to grow even further. Key new entrants like Fossil, Titan, etctera have entered the Indian wearable market primarily through retail stores. In addition, certain online vendors like Xiaomi and GoQii are also exploring offline channels to expand their customer base and enhance their presence, said IDC, suggesting an uber new trend disrupting the market.