Wrist-worn devices are expected to continue driving the wearables market forward, according to the International Data Corporation (IDC). Meanwhile, lesser-known wearable products, such as clothing and earwear, will experience market-beating growth in the years to come.
IDC predicts vendors shipping a total of 121.7 million wearable devices this year, marking a 16.6 percent increase from the 104.4 million units shipped in 2016. The wearables market is forecast to maintain this pace of growth with shipments reaching 229.5 million units in 2021, resulting in a five-year compound annual growth rate (CAGR) of 17.2 percent.
"We expect the most innovation and development in the wearables market to take place on the wrist," Ramon T. Llamas, research manager for IDC's Wearables team, said in a statement. "It's the ideal location for users to collect, view, and interact with data and applications, and the point to execute tasks like responding to notifications or communicating with other people and devices. Layer on top of that varieties in style, design, segment, and feature set, and wrist-worn wearables are poised to remain well out in front of the market."
Among the factors fueling growth in the wearables market IDC sees the inclusion of cellular connectivity, as well as improved sensors and algorithms. "Not only do these technologies provide increased accuracy, but they also make it possible for companies to sell wearables through new channels and more importantly, to new customers," added Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers.
Top Wearables Categories
Watches, which encompass both smartwatches (capable of running third-party applications) and basic watches, will comprise the majority of wearable devices throughout the forecast. Apple and Android Wear will drive the market forward, but the market will also see new entrants running on their own proprietary operating systems — including Fitbit's own Java-based OS and Garmin's Connect IQ. Meanwhile, basic watches will see their volumes swell past smartwatch volumes by adding wearable technology to traditional watches.
Meanwhile, basic wrist bands — aka activity trackers — will grow at a CAGR of just 1.9 percent. This market will consolidate towards market leaders, leaving smaller vendors to evaluate their strategies. Also adding to the competitive pressure are declining average selling prices and experiences that show little differentiation against each other and the market leaders.
Clothing will trail far behind wrist-worn wearables, capturing single digit market share but outperforming the overall market in terms of growth. Fitness-oriented clothing for professional and semi-professional teams and athletes, with features that track fitness performance and fatigue embedded within the clothing, will drive volumes forward. Consumer interest will trail further behind.
Earwear (excluding Bluetooth headsets) will likewise maintain single-digit market share, but will enjoy the fastest growth of any product within the market. It is because earwear presents a different value proposition compared to other devices in that users consume the data over audio. Beyond music playback, users can also look forward to fitness tracking and coaching, real-time language translation, and audio modulation.
Finally, IDC's "Others" category includes jewelry, clip-on devices, non-AR/VR eyewear and other devices that tend to target specific users and have only a handful of vendors offering them. As such, total market share is expected to remain less than two percent at any time during the forecast. Still, the technologies brought forth from these innovations merit close and continued observation, in that they can reveal unique insights and perhaps be appropriated into other products.