New research from Gartner says the global wearables market will grow 16.7% this year driven by strong smartwatch sales led by Apple.
The research group says that sales of wearable devices will generate revenue of $30.5 billion in 2017. Of that, $9.3 billion will be from smartwatches.
Gartner predicts that 41.5 million smartwatches will be sold this year. They’re on pace to account for the highest unit sales of all wearable device form factors from 2019 to 2021, aside from Bluetooth headsets. By 2021, sales of smartwatches are estimated to total nearly 81 million units, representing 16% of total wearable device sales.
"Smartwatches are on pace to achieve the greatest revenue potential among all wearables through 2021, reaching $17.4 billion," says Angela McIntyre, research director at Gartner. Revenue from smartwatches is bolstered by relatively stable average selling prices (ASPs) of Apple Watch. "The overall ASP of the smartwatch category will drop from $223.25 in 2017 to $214.99 in 2021 as higher volumes lead to slight reductions in manufacturing and component costs, but strong brands such as Apple and Fossil will keep pricing consistent with price bands of traditional watches.”
She adds that Apple will continue to have the greatest market share of any smartwatch provider. However, as more providers enter the market, the company’s market share will decrease from approximately a third in 2016 to a quarter in 2021, Gartner forecasts.
The announcement of a new Apple Watch expected in September may enable direct cellular connectivity for interacting with Siri, texting and transferring sensor data when the phone or Wi-Fi isn’t present. Two sub-categories that Gartner expects to perform well are kids' smartwatches and traditional watch brands, which will emerge as significant segments for smartwatches.
Gartner expects kids' smartwatches to represent 30% of total smartwatch unit shipments in 2021. These devices are targeted at children in the two to 13 year-old range, before parents provide them with a smartphone.