Study: Wearables market to grow 15% on strength of smartwatches

Brief:

The market for wearable technology like smartwatches and wireless headphones that connect to virtual assistants is forecast to grow 15% to 198.5 million units this year, per an announcement from the International Data Corporation (IDC). Yearly growth of about 9% will mean that the wearables market will expand to 279 million devices by the end of 2023, the researcher said.
Smartwatches will grow their share of the entire wearables market to 47% by 2023 from 44% last year on the growing popularity of the Apple Watch and various versions of Android-based devices from a variety of gadget makers. Apple's WatchOS mobile operating system will power 28% of all smartwatches by 2023, per IDC.
Earwear, which are frequently called "hearables" or "ear-worn devices," will be the second-biggest category of wearables with a 31% share of the market by 2023. Biometric sensors and virtual assistants like Siri, Google Assistant and Amazon Alexa will support the category's growth, per IDC.

Insight:

The growing adoption and greater functionality of smartwatches could start to open more opportunities for marketers, who have mostly avoided the devices until now. The challenge will be in creating engagements for such small screens. IDC's forecast indicates that consumers will want the most functionality they can find from a wearable device. For many people, that means a smartwatch with more features than fitness trackers that help health-conscious wearers monitor their physical activity with a GPS connection. Wristbands are forecast to lose share in wearables market, falling to 18% by 2023 from about 25% last year, per IDC. That means companies like Fitbit will have to continue expanding their lines of watches to support future sales growth. Fitbit this month introduced a loyalty program and lower-priced devices aimed at reaching a broader group of consumers.

Amazon may gain strength in the wearables category with this year's rollout of a new set of developer tools, including the Alexa Mobile Accessory Kit that lets its Alexa virtual assistant work with wearable Bluetooth products like headphones, smartwatches, fitness trackers and other audio devices, per TechCrunch. Amazon leads in the smart-speaker category with its Echo devices, but the e-commerce giant has had less success in hardware categories like smartphones. The company needs to expand Alexa's capabilities to other devices to remain competitive with Google, whose Google Assistant runs on Android phones and Google Home devices, and Apple, whose Siri likely will get major artificial intelligence (AI) upgrades.

Mobile payments are a major convenience that may support the growth of wearables like smartwatches that are equipped with hardware to handle point-of-sale purchases. Convenience is the top reason that many consumers are adopting mobile payments, per a survey by innovation and design company Tallwave. Two-thirds of survey respondents said they had used Paypal's mobile app, while 37% used Venmo. Apple Pay, Google Pay and Zelle were also popular. Venmo is particularly popular among younger groups, with 25% of people under 24 using the app, mainly to pay friends, per Tallwave.

The popularity of the Apple Watch is positive for Apple as the tech giant seeks to bolster its hardware line amid slowing sales for the iPhone in China. Apple is said to be working on an augmented reality (AR) headset, its first new wearable product since the Apple Watch came out in 2014, that will work with the iPhone and may be available as early as this year.