Author(s): Ben Wood
We recently published an updated wearables forecast for CCS Insight clients and I wanted to share some of the highlights with a wider audience. It's a market we've been tracking for many years and that has made remarkable progress.
In 2019, we expect 142 million wearable devices will be sold, rising to 260 million units in 2023 and creating a market worth almost $30 billion.
There's little doubt that the "halo" effect of the Apple Watch has been a major contributor to this growth. We estimate that 26 million Watch units were sold in 2018, leaping 63% over the year and accounting for an impressive 65% of the value of the smartwatch market in 2018.
This strong performance has benefited other manufacturers, as people who own Android smartphones jump on the smartwatch bandwagon. Indeed, we've seen good progress from suppliers including Fitbit, Fossil, Garmin, Huami, Huawei and Samsung, which all upped their sales of smartwatches in 2018.
We continue to believe that if consumers are given the right combination of product, brand and price their interest in smartwatches grows. Fitbit's success with smartwatches is a good example of this and has prompted us to take a more optimistic view of the market. We now expect 90 million smartwatches will be sold in 2019, rising to 162 million units by 2023.
Shipments of wearable devices, worldwide, 2013-2023
Source: CCS Insight wearables forecast (February 2019)
Click on the image for a larger version.
Traditional watch brands have also set their sights on the smartwatch market, mostly relying on Google's Wear OS platform. Leading the charge is Fossil, which we estimate sold 3.5 million smartwatches in 2018 under a variety of different brands. Other players include Casio, Guess Watches and Mobvoi, the company behind the TicWatch brand. Premium names Louis Vuitton, Montblanc and TAG Heuer are also active in the smartwatch category, and have all already shipped at least two generations of Wear OS products.
We also believe the emergence of well-known watch brands and luxury players is an encouraging sign, given the disdain heaped on smartwatches at the industry's premier event Baselworld, shortly after the launch of the Apple Watch. Having initially shrugged off smartwatches as a gimmick, some of the more progressive watchmakers now realize they must invest in new technology to remain relevant to a new generation of watch buyers.
The lacklustre attendance at this year's Baselworld, which starts today, is probably a reflection of many watchmakers being out of step with the wider trend in wrist-worn fashion. One of the biggest stories from previous years of the show was TAG Heuer entering the smartwatch segment. And in 2017, Samsung spent huge sums in the event despite not being made particularly welcome. With the benefit of hindsight, the event organizers missed a trick by not embracing technology with more vigour.
However, it's not all about full-touch advanced devices like the Apple Watch. A huge chunk of the market is occupied by simple cellular watches targeted at children. We estimate that 27 million smartwatches for kids were sold in 2018, of which 25 million were in China. We're also seeing new features like video calls and contactless transactions for school registration or lunch payments becoming popular applications on some of these devices, in addition to the standard functions of voice calls, messaging and location tracking.
We believe this market will continue to flourish in 2019, with growth expanding beyond China. Kids' smartwatches have already made an impact in the US, where we're seeing stronger interest from carriers. If popular child-centric brands such as Disney, with its Star Wars-themed devices, and Lego decide to license their brands they would further boost the category.
Another important area included in our forecast is sports watches, dominated by the likes of Garmin and Huami, with its Amazfit label. Fitness bands remain important, too: they returned to growth in 2018 with sales of 44 million units in 2018, up from 39 million in 2017. That said, the race to the bottom on pricing is squeezing margins hard.
We also cover smart hearables, which are expected to deliver a modest 3 million units in 2019. However, the explosive growth of wireless in-ear headphones as more and more smartphones lack a traditional 3.5 mm audio jack means the market for smart hearables is poised to enjoy good momentum, and we expect it to exceed 23 million units 2023.
Last but not least, CCS Insight expects smart sports shoes to be the beachhead product in smart clothing. Shipments will hit 2.5 million pairs in 2019, marking a modest start to a broader market with significant potential.
More details of our extensive wearables research service can be found at: ccsinsight.com/research-areas/wearables/