Smartwatches and hearables are expected to drive sales of wearables in the next five years, as fitness trackers feel the pain.
A new report from market research firm CCS Insight, predicts good days ahead for smartwatches. The category which struggled to gain a footing for a number of years will grow steadily to reach 140 million units sold in 2022, nearly double the 71 million in 2017.
Fitness trackers lost ground last year and seem be on the decline. Sales fell to 40 million units, which was 23% below the peak in 2016. The category is dominated by Fitbit in the West and Huami (a subsidiary of Xiaomi) in China. The two accounted for a whopping 80% of global sales in 2017.
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Back to the smartwatches and unsurprisingly Apple has this market pretty much sewn up. The company shifted some 16 million devices last year, and could match the output of the entire Swiss watchmaking industry in 2018. Low cost Asian-made smartwatches also sold well.
“Apple has become the market leader for smartwatches. Sales volumes have exceeded expectations and the introduction of a cellular-enabled model has pushed up the value of its sales, which we estimate at $5 billion in 2017,” said George Jijiashvili, senior analyst for wearables at CCS Insight.
Watches running Android Wear, on the other hand, are not exactly flying off the shelves. Despite some companies such as Fossil reporting healthy growth, only 5 million Android Wear watches were sold last year.
“Google has paid a heavy price for its recent lack of commitment to Android Wear. Attention seems to have shifted to its Pixel smartphones and Google Home products at the expense of smartwatches,” adds Jijiashvili.
“To stay competitive and support the growing number of traditional watchmakers making smartwatches such as Fossil, Guess, Movado and TAG Heuer, there needs to be a major update to Android Wear in 2018.”
Interestingly, the market research company highlights strong sales of connected watches for children in China. Some 25 million units were sold in 2017. The category is yet to pick up in a big way in other countries. Only 1 million were sold in the US last year, and growth in Europe is hampered by privacy concerns and regulatory issues.
CSS insight also predicts healthy growth of the hearables market. This includes a variety of smart headsets for listening to music such as the Apple AirPods, as well as biometric hearables from brands such as Bragi and Jabra. Sales are projected to grow from 1.5 million units last year, to 6 million this year and 30 million in 2022.
Overall wearables sales will grow by an average of 20% in each of the next five years. By 2022, it should become a $29 billion market with annual sales approaching 250 million units.
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