Estimates indicate that $310.4 million wearable devices were sold worldwide in 2017, an increase of 16.7 percent from 2016, according to Gartner. By 2021, wearable Devices worldwide are forecasted to exceed 504 Million units and sales of smartwatches are estimated to total nearly 81 million units, representing 16 percent of total wearable device sales.
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.
“Smartwatches are on pace to achieve the greatest revenue potential among all wearables through 2021, reaching $17.4 billion,” said Angela McIntyre, research director at Gartner.
However wearable devices must continue to innovate or abandonment rates could rise. According to a recent consumer survey, the abandonment rate of smartwatches is 29% and 30% for fitness trackers because people do not find them useful, they get bored with them, or they break. Dropout (no longer using the device) and adoption slowdown are serious problems for the industry.
Device providers need to continue to innovate and add more capabilities to wearable devices, such as payments, voice interaction with VPAs, and authentication, giving people more ways to use them without reaching for the smartphone.
Wearable devices are rapidly advancing in technology, functionality, and applications and are expected to continue to accelerate into the mainstream. Consider the wearable payment devices that Visa is showcasing at the Winter 2018 Olympic Games. NFC-enabled payment gloves, commemorative stickers and Olympic pins are allowing fans and athletes to complete seamless and secure payments with a simple tap at any contactless-enabled terminal.
In the long term, there is tremendous opportunity for wearables in many industries and applications. Employing machine learning and artificial intelligence (AI) offers the opportunity for improved user experience at every point of interaction increasing the usability and accuracy of wearable devices.
Gartner clients can learn more in the report: “Forecast: Wearable Electronic Devices, Worldwide, 2017.”
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