Global Wearable Device Sales Expected to Grow 17 Percent in 2017

According to a Gartner forecast, 310.4 million wearable devices will be sold worldwide in 2017. This will be an increase of 16.7 percent from 2016. The sales of wearable devices will generate $30.5 billion of revenue in 2017 and of that; $9.3 billion will be from smart-watches.

Gartner expects 41.5 million smart-watches to be sold globally in 2017. They are on pace to account for the highest unit sales of all wearable device form factors from 2019 to 2021, aside from Bluetooth headsets. By 2021, sales of smart-watches are estimated to total nearly 81 million units, representing 16 percent of total wearable device sales.

Revenue from smart-watches is bolstered by relatively stable average selling prices (ASPs) of Apple Watch. The overall ASP of the smart-watch category is expected to drop from $223.25 in 2017 to $214.99 in 2021 as higher volumes lead to slight reductions in manufacturing and component costs. Although strong brands such as Apple and Fossil will keep pricing consistent with price bands of traditional watches.

Smart-watches: A Market Divided Between Four Types of Providers

Apple will continue to have the greatest market share of any smart-watch provider. However, as more providers enter the market, Apple's market share is expected to decrease approximately a third in 2016 to a quarter in 2021. The announcement of a new Apple Watch expected in September may enable direct cellular connectivity for interacting with Siri, texting and transferring sensor data when the phone or Wi-Fi is not present. Gartner expects other consumer electronics brands such as Asus, Huawei, LG, Samsung and Sony to sell only 15 percent of smart-watches in 2021, because their brands do not have as strong an appeal as lifestyle brands for personal technologies.

Two sub-categories that Gartner expects to perform well are kids' smart-watches and traditional watch brands, which will emerge as significant segments for smart-watches. Gartner expects kids' smart-watches to represent 30 percent of total smart-watch unit shipments in 2021. These devices are targeted at children in the two to 13 year-old range, before parents provide them with a smartphone.

The other sub-category, which will account for 25 percent of smart-watch units by 2021, is fashion and traditional watch brands. A final sub-category is represented by the startup and while-label brands (e.g., Archos, Cogito, Compal, Martian, Omate or Quanta), which will account for 5 percent of smart-watch unit sales in 2021.

Bluetooth Headsets to Account 48 Percent of All Wearable Devices in 2017

In 2017, Gartner expects 150 million Bluetooth headsets to be sold, an increase of 16.7 percent from 2016. Sales will increase to 206 million units in 2021, meaning Bluetooth headsets will remain the most sold wearable device through 2021. The growth in Bluetooth headsets is driven by the elimination of the headphone jack by major smartphone providers.

Head-Mounted Displays Remain in Infancy

Head-mounted displays (HMDs) account for only 7 percent of all wearable devices shipped in 2017, and will not reach mainstream adoption with consumers or industrial customers through 2021. Current low adoption by mainstream consumers shows that the market is still in its infancy. Near-term opportunities for virtual reality HMDs among consumers are with video game players. Workers are also expected to use them for tasks such as equipment repair, inspections and maintenance, but also in warehouses and manufacturing, training, design, customer interactions and more. Theme parks, theaters, museums and sports venues will purchase HMDs to enhance the customers’ experience in interactive attractions or movies, and add information and supplemental images at sporting events.

Additional analysis on driving digital business transformation will be presented during Gartner Symposium/ITxpo 2017, the world's most important gathering of CIOs and other senior IT executives.

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