Smartwatch prices are set to reduce in the next year, fuelling 26% growth in the wider wearable device market, according to research by Gartner.
Smartwatches have grown in popularity since their emergence as a market segment in 2014, aided significantly by the release of the Apple Watch in 2015.
However, as they are traditionally seen as a supporting technology, and have remained at a relatively high price point, they have largely stayed in the realm of technology enthusiasts rather than reaching true mass-market appeal.
According to Gartner, this is set to change in 2019, with lower price points driving a growth in shipments from 53 million units to 74.09 million units. By 2022, the organisation predicts shipments will reach 115.20 million units.
“At the moment, the smartwatch market is bolstered by the relatively stable and higher average selling price (ASP) of the Apple Watch,” said Alan Antin. senior director at Gartner.
“But the overall ASP of smartwatches is expected to slowly decline from $221.99 in 2018 to $210 in 2022, due to lower-priced competitors and as higher volumes lead to reductions in manufacturing and component costs, while strong brands like Apple and traditional watch brands try to keep pricing stable.”
This drop in smartwatch prices will also help to drive overall wearables shipments from 178.91 million units in 2018 to 225.12 million units in 2019, an increase of 26%. The total spending by end-users is projected to be $42bn in 2019, of which $16.2bn will be spent on smartwatches.
As smartwatch prices drop, the market will segment
As a wider base of users embrace dropping smartwatch prices and make purchases in the sector, the market it set to mature and evolve to meet more varied consumer demands.
This will result in a segmentation of the market, as distinct use-cases emerge.
Leading consumer electronics brands will continue to offer options for tech-savvy users, while fashion and traditional watch brands will offer more choices to meet the needs of design and luxury focused consumers.
“Traditional watch brands such as Fossil and Casio will gain market share by offering more style and choice in their portfolio than the technology brands,” said Antin.
“We think that fashion and traditional watch brands are likely to account for up to 20% of unit shipments by 2022.”
There will also be growth of the children’s watches segment, while niche brands will cater to specific needs, such as medical issues.
Ear-worn devices to add to wearables growth as virtual assistants mature
While smartwatches are set to drive growth in the next year, it is ear-worn devices that will see the biggest rise in the longer term.
A diverse segment covering ear-worn fitness and health coaching products, communications and entertainment devices and hearing aids and other medical devices, these are also known as hearables.
While in 2018 these accounted for around 19% of the market, earn-worn devices will climb to 35%, surpassing smartwatches, by 2022. Gartner predicts that in that year there will be 158.43 million units shipped in this segment.
Key to their growth will be the continued development of virtual personal assistants such as Apple’s Siri and Google Assistant, which are set to become increasingly sophisticated over the next few years.
This is set to make the technology commonplace in future ear-worn devices, making them more appealing to users and taking over many of the tasks currently handled by smartphones.
AR and VR headsets buck trend with price rise
While the prices in most segments are set to drop, head-mounted displays, primarily used for augmented reality (AR) and virtual reality (VR), are set to increase in price in the next few years.
This is because the technology is at an earlier stage in its development cycle, meaning there are significant technological advances on the way. As a result, the priority from now until 2022 will be in driving improvements in the headsets, with prices rising to match.
While it is likely that headsets will see a settling in price, this is unlikely to occur until later in the 2020s.