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The smart wearables market will be worth USD22.9 billion worldwide by 2020

Enrique Velasco-Castillo Senior Analyst

We anticipate that smart watches will become the dominant wearable smart device in terms of worldwide sales in early 2017, when Apple has cemented its hold on the market.

Sales of smart wearable devices, such as the Apple Watch, will generate USD22.9 billion in revenue by 2020, according to Analysys Mason's new report Smart wearables: worldwide market trends, forecasts and strategies 2014–2020 (see Figure 1). The market will grow at a CAGR of 50% between 2014 and 2020.

 

Figure 1: Smart wearable installed base, unit sales and device revenue, worldwide, 2013–2020 [Source: Analysys Mason, 2014]

The smart wearables market will reach an inflection point in 2015, driven by the launch of the Apple Watch

Sales of competing devices will slow following the announcement of the Apple Watch on 9 September 2014, as consumers wait for Apple’s smart watch to reach stores in 1Q 2015. Fewer than 1 million smart watches will have sold by the end of 2014, but this number is expected to leap to 13.6 million in 2015, as Apple drives the market.

Other manufacturers – such as LG, Motorola and Samsung – will eventually benefit from the increased interest in smart watches as a credible device type, but we do not anticipate any vendor matching Apple’s market share in the short or medium term. The restriction of the Apple Watch to users of the iPhone 5 or later, and planned interoperability with other Apple devices and platforms, such as Apple TV (digital media), HomeKit (smart home control), HealthKit (health and fitness) and Apple Pay (mobile payments), will strongly reinforce Apple’s device and lifestyle ecosystem.

Smart watches will dominate sales of wearable devices by 2017, but take-up is still limited by consumer interest

Smart bands will account for 90% of smart wearable device sales in developed markets in 2014, but this category will peak in 2016, driven by cannibalisation from smart watches with greater functionality, and new devices that serve niche use-cases more capably (see Figure 2).

Figure 2: Smart wearable unit sales by device category, developed markets, 2012–2020 [Source: Analysys Mason, 2014]

The total addressable market for smart watches is limited – in Apple’s case, by the active device base of compatible iPhones (the iPhone 5 and newer), but generally by consumer interest. Our forthcoming Connected Consumer survey indicates that only 30% of US consumers would be interested in buying a smart watch, compared with 27% in the UK and 28% in Spain.

Nevertheless, we anticipate that smart watches will become the dominant wearable smart device in terms of worldwide sales in early 2017, when Apple has cemented its hold on the market. In our forecast, we anticipate that the smart watch market in developed regions will be worth USD12.9 billion by 2020.


Analysys Mason’s Smart wearables: worldwide market trends, forecasts and strategies 2014 – 2020 forecast report – the first to take into account the market impact of the latest devices announced by Apple, LG, Motorola and Samsung in 4Q 2014 – provides:

  • a detailed 7-year forecast of the installed base, unit sales and device revenue for consumer-oriented (B2C) smart wearable devices, split into:
    • five regions: Central and Eastern Europe, Developed Asia–Pacific, North America, Western Europe and the rest of the world
    • five device types: smart bands, smart watches, smart glasses, ‘transformables’ and others.
  • an overview of device availability during the past 2 years, forthcoming launches and product roadmap strategies
  • an in-depth analysis of the trends, drivers and inhibitors for the adoption of smart wearables, and the strategies that players are adopting to encourage take-up
  • comparative case studies from leading players in the smart wearable device market, including Apple and Google
  • key implications and recommendations for mobile operators, manufacturers and app developers.