Renewed growth of wearable market expected in 2023
Following a downturn in 2022, global shipments of wearables are expected to return to growth over the next 12 months.
According to a new report from the IDC, global shipments of wearables grew only by 1.7% in Q3 2022 as compared to the same period in 2021. Looking at 2022 as a whole, the market research company expects we will see a year-on-year decline of 3.3% to 515.6 million units.
One has to go back nearly a decade to find another year where wearable shipments saw a fall. That was back in 2013 when the market was still in its infancy.
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The reasons for the poor performance in 2022 are numerous. But the main is the downturn in the global economy which has filtered into wearable purchases. High inflation, low pay growth – you get the picture.
The expected fall in shipments also has something to do with COVID. The previous two years saw high growth in the market. Now that governments have relaxed restrictions in most countries, demand for wearables has shrunk a bit.
Return to growth in 2023
But the IDC is optimistic about 2023 and is forecasting renewed growth. To be exact, they are expecting shipments of 539 million units during the 12 months which equates to an increase of around 4.3%.
A trend which should not come as much of a surprise is growth in wearable shipments in India and other Asian countries. These markets are less mature than the US and the EU so have a lot of catching up to do.
So while the likes of Apple, Garmin, Xiaomi, Samsung will continue to dominate the market, expect the rise of local companies in these regions. IDC says in Q3 2022 3 of the top 10 wearable companies are based in India!
In fact, the country is expected to leap-frog the US to become the second largest market for wearable shipments soon. Of course, the wait for it to surpass the US in terms of dollar value will be a bit longer.
In the medium term IDC expects the growth in wearable shipments to continue at a health pace. By the end of 2026 annual shipments will reach nearly 630 million. A compound annual growth rate (CAGR) of 5.1% is forecast over the next 5 years. CAGR of smartwatches during this period is expected to come in slightly higher – at 6.3%. Of course, that’s assuming we dont get any other unpleasant global health surprises or shocks to the economy!
Companies are increasingly finding creative ways to make their product stand out from the competition. IDC says market differention will become increasingly difficult in the coming years.
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