Global wearable market to grow 163% this year
Apple Watch to gain instant leadership and hold onto lead well into 2019, IDC predicts
Wearable device shipments are set to increase to 173.4m units by 2019, up from the 28.9m units shipped in 2014, according to the latest report from IDC's Worldwide Quarterly Wearable Device Tracker.
Growth will come from a growing list of vendors, a proliferation of devices, experiences and price points, as well as steady consumer adoption, IDC said. These factors are already at play, according to the research house, which predicts that 2015 will see 76.1m units being shipped in 2015 - up 163.6% from 2014.
If IDC's predictions about 2019 numbers hold, the market will experience a five-year compound annual growth rate (CAGR) of 22.9%. That said, the research house pointed out that total shipments would include both basic and smart wearables - which are two very different product categories in many aspects.
"Smart wearables only account for about a third of the total market today while basic wearables, led by fitness trackers, account for the rest," said Jitesh Ubrani, senior research analyst for IDC's Mobile Device Trackers.
"Driven by advancements in user interface (UI) and features, smart wearables are on track to surpass the lower-priced, less-functional basic wearable category in 2018. Smart wearables will quickly move from a smartphone accessory primarily focused on notifications to a more advanced wearable computer capable of doing more processing on its own."
Driving the market and gaining attention is smart wristwear, including watches and bands, which are capable of running third-party applications, IDC said. This includes the Apple Watch, Motorola's Moto 360, Samsung's Gear S-series, and Pebble's Time.
"We are at a stage now where more vendors are getting into this segment, setting the stage for more selection and ultimately more volumes," explained Ramon Llamas, research manager for wearables at IDC.
"Potential buyers wary of what is currently available will most likely be more interested once the second- and third-generation devices come to market with improved hardware and applications. From there, word-of-mouth and user-ambassadors will help to spur interest."
Looking ahead, Llamas said that customers will need to pay close attention to the different operating systems that power smart wristwear.
"Different smart wristwear operating systems are compatible with certain smartphone operating systems, and sometimes with specific models," he said.
"Beyond that, experiences and available applications will widely vary. Just as competition exists for different smart wristwear models, this competition carries over into the operating system landscape."
In terms of the operating systems available, IDC said that watchOS, which powers the Apple Watch, will quickly establish itself as the overall leader in the smart wristwear market in its first year. IDC also predicted that watchOS will maintain its leadership position throughout its five-year forecast period. Second and third generations of the Apple Watch will drive shipment volumes later on in the forecast, particularly among customers taking a wait-and-see approach, IDC said.
However, the research house also predicted that the Apple Watch will see its market share erode as other platforms - particularly Android Wear - gain greater salience in the market.
In terms of Android Wear's prospects, IDC predicted that the operating system will eventually experience market-beating growth, with a combination of consumer electronics heavyweights and an expanding list of watch brands expected to launch their own smartwatches in the years to come. IDC added that Android Wear will be helped by the broader and deeper selection of devices at multiple price points that will appeal to a wider audience.
IDC's outlook for Pebble was less positive. While the company is one of the pioneers of the smartwatch market, IDC predicted that the company will see its market share decline even as overall volumes grow.
"Competitive headwinds from watchOS and Android/Android Wear will keep its overall growth in check, but its low prices, compatibility with Android and iOS-powered smartphones, and avid fan base will sustain its presence," the research house said.
Meanwhile, IDC described Samsung's Tizen platform as the dark-horse of the market. With Samsung opening up the Tizen SDK and making its Gear S2 and subsequent devices compatible with flagship smartphones from other Android OEMs, the total available market for Samsung has opened up significantly. Still, IDC said that, as a current small player in the market, Tizen must still win over customers currently looking at other watches available for Android smartphones.