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Apple's wearables rivals need Watch to be a winner: IHS

Research firm predicts 2,700% surge in smartwatch market over next five years

Apple's wearables rivals need Watch to be a winner: IHS
The Apple Watch will be the lynchpin of a global boom for wearable devices, says IHS.

The Apple Watch will drive a 2,700% surge in the smartwatch market over the next five years, according to analyst firm IHS.

The company expects smartwatch shipments to grow from 3.6m in 2014, to 101m in 2020. It also predicts that smartphones will represent a far greater commitment among smartphone vendors, as compare with their handsets.

"Apple Watch success will drive the overall smartwatch market," said Antonios Maroulis, analyst at IHS Technology.

"The smartwatch will become a key accessory device offered by most leading smartphone manufacturers seeking to dominate this new profitable market. We forecast the ratio of smartwatch shipments to smartphone shipments will increase from 1:500 to 1:20 between 2014 and 2020."

IHS said the Apple Watch will leave "an enormous addressable market untapped" because of the high entry price and the need for a recent iPhone model to get the most out of the wrist-wear's functionality. IHS cited 2bn Android smartphone users and even Apple users reticent to pay the $349 for a basic Apple Watch, as potential customers for cheaper Android Wear-based smartwatch vendors.

IHS projects 19m units, or 56% of the total smartwatch market for Apple this year, but expects this share to drop to 38% by 2020 as other manufacturers enter the fray and the consumer base grows. Google's Android Wear will ship 96m units over the next five years, according to IHS, and if the search giant elects to support iPhones this figure could be much greater.

"Should Apple stumble with its foray into smartwatches, the smartwatch market will suffer similarly. Smartwatches could then follow the fate of Google Glass," said Ian Fogg, senior director of Mobile and Telecoms at IHS. "Without Apple and its marketing strength, the smartwatch category needs greater marketing spend from other smartwatch makers to overcome damage to consumer perceptions. Apple's smartwatch competitors need the Apple Watch to succeed."

The key to Apple's success lies in the apps resident on and downloadable to the Watch. Early adopters have already decried the slow operation of those apps and critics have written of their frustration with everything from calendars to maps.

"Delivering a wide range of apps will be critical for smartwatch success," Maroulis said. "Apple's and Google's success with existing smartphone application stores will give them an invaluable head start over challengers."

Because of weak app ecosystems, IHS forecasts other smartwatch OS devices, excluding Apple and Android Wear, to amount to just 40 percent of smartwatch shipments in 2020.

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