A New Wearables Forecast

on November 4, 2014
Reading Time: 3 minutes

The wearables category has seen some important new announcements and additions over the last few weeks, so it’s not surprising to see more attention being paid to the market. Of course, there was the Apple Watch announcement back in September. Just last week Microsoft debuted the Microsoft Band to reasonably decent acclaim, while HP jumped into the act with their Michael Bastian-designed MB Chronowing smart watch. The week before that, we also saw several new announcements from early market leader FitBit with their Charge, Charge HR, and Surge additions to their line of activity trackers. The week before that Will.i.am jumped in with his standalone i.amPULS smart watch.

It’s as if everyone thinks this market is set to explode.

In many cases, however, all we really got were announcements, because a lot of these new products won’t start shipping until 2015. In fact, my December 2013 prediction that there would be more wearable announcements than wearable shipments in 2014 is proving to be significantly more prescient than even I could have imagined…

Despite all this news and excitement around the wearables category, I’m still not convinced it’s going to be as big a market as many have made it out to be. The primary, over-riding problem is that no one has really been able to provide a compelling reason why the vast majority of people would want a wearable, let alone feel that they “need” to have one. Sure, there are good cases to be made for fitness junkies, the whole “quantified self” movement and bleeding-edge early adopters, but for most people, smart wearables still feel like a solution in search of a problem.[pullquote]For most people, smart wearables still feel like a solution in search of a problem.”[/pullquote]

If that wasn’t enough, many of these early products suffer from limited battery life, offer only semi-accurate sensor readings, and lock you into working with only certain smartphones.

That doesn’t mean I don’t think people will buy these devices in reasonable numbers. Believe it or not, I actually do, because there is still something intriguingly compelling about moving computing and information access even closer to your body. Plus, the relatively moderate price points for the devices will enable a number of people to purchase and try them on an experimental basis. However, I characterize the expected market reaction to be tepid—not hot, but not really cold either.

To be more specific, in the newly updated smart wearables forecast that my firm TECHnalysis Research just published yesterday, we predict that the worldwide wearable market will double from just under 20 million unit shipments this year to around 40 million in 2015. Yes, that’s strong growth on a percentage basis, but remember that Apple by themselves sold nearly 40 million iPhones just last quarter. Put under that comparative light, the number isn’t that overwhelming.

WW-Wearables-Forecast-Update

©2014, TECHnalysis Research

Longer term, we believe the wearable market will grow to around 103 million units in 2018, with most of the shipments coming from the smart watches segment. On a revenue basis, the numbers are expected to move from around $2 billion in 2014 to $16 billion in 2018.

By the way, just to be clear, here’s the definition of smart wearables we used as a basis for this forecast:

A smart wearable device is a battery-powered, portable electronic device worn on a human body that offers some level of onboard processing and runs some type of integrated software. Most wearables have integrated sensors of various types as well as connectivity options (either wired or wireless) to other smart devices, such as smartphones. Electronic devices that are worn on the body but don’t have their own built-in compute capability, such as basic Bluetooth headsets or heads-up displays, are not considered smart wearables.

The wearable market has caught the attention and fancy of many leading tech vendors and much of the tech press, because it’s an intriguing new potential market. While I, too, share their enthusiasm for following it, I think it’s prudent to keep our near-term expectations in check or else we could end up with serious disappointment.

You can read more about the TECHnalysis Research updated Wearable Forecast here.