[September 15, 2016]

Worldwide Smartwatch Market Will See Modest Growth in 2016 Before Swelling to 50 Million Units in 2020, According to IDC

A year after the launch of the Apple (News - Alert) Watch established a new benchmark for the worldwide smartwatch market, new smartwatch shipments are expected to see only modest growth for the rest of 2016 due to late-in-the-year and iterative product releases. According to a new forecast from the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker, total smartwatch shipments will reach 20.1 million units in 2016, an increase of 3.9% from the 19.4 million units shipped in 2015.

IDC (News - Alert) categorizes smartwatches as those that can run third party applications. Examples include Apple's Watch, Samsung's Gear S3, Motorola's Moto 360, and Pebble's Watch. Smartwatches are part of IDC's larger category of Smart Wearable devices, which also include smart glasses and certain wristbands. IDC expects total smart wearable volumes to reach 21.5 million units shipped in 2016. By volume, smartwatches account for the largest part of the category, and are expected to reach a total value of $17.8 billion dollars in 2020.

Meanwhile, IDC categorizes a wearables that do not run third party applications as a basic wearable devices. Basic wearables can take on multiple form factors - wristbands, clothing, and watches - but underpining all of them is that none of them run third party apps. Examples include Fitbit's selection of fitness trackers, Garmin's Vivofit devices, and Xiami's MiBand. By the end of 2016, total shipments of basic wearables will reach 80.7 million units.

* Forecast values.

"To date, smartwatches have remained in the realm of brand loyalists and tech cognoscenti, but we expect that to change over the next few years," noted Ramon Llamas, research manager for IDC's Wearables team. "First, smartwatches will look and feel like traditional watches, appealing to those who put a premium and design and style. Second, once the smartwatches get cellular connectivity, they'll disconnect from the smartphone, making them more useful. Third, smartwatch applications will build on this cellular connection, and connect with other devices within the home and at work. Finally, smartwatch prices will come down, making them more affordable to a broader market."

"It is increasingly becoming more obvious that consumers are not willing to deal with technical pain points that have to date been associated with many wearable devices," said Ryan Reith program vice president for IDC's Mobile Device Trackers. "Complaints about battery life, smartphone dependancy, and minimal use cases have been well versed across most publications and research findings. The aformentioned improvements that are rapidly being deployed by most vendors should improve this aspect, but at the same time the increase in devices that have more fashion appeal over technological appeal should also be a catalyst to growth in both smartwatches and basic watches with minimal functionality beyond normal analog."

Top Five Smartwatch Platforms

watchOS will stay atop the smartwatch platform list throughout the forecast. The Series 2 Watch addresses some of the shortcomings of its Series 1 predecessor, but the lower price on the Series 1 (starting at $269 USD) may end up driving more volume in the upcoming holiday season. Still, these will be enough to keep watchOS the overall market leader, and future iterations of the Watch with new body styles, materials, and cellular connectivity will help cement the company's spot later in the forecast.

Android (News - Alert) and Android Wear will see the fastest growth of any platform on the list, and by 2020 will challenge watchOS for the top position in the worldwide smartwatch market. Support from OEMs both inside and outside of the IT industry will adopt Android Wear as the cornerstone of their smartwatch strategy, and in the process will address gaps in the product portfolio to lure new users.

Tizen will remain in third place throughout our forecast. This puts significant pressure on Samsung, Tizen's sole supporter, to develop devices and platforms, and cultivate the application selection. Thus far this has proved successful for Samsung, especially in launching its unique bezel-based interface and cellular-capable smartwatches. What bears close observation is when watchOS and Android/Android Wear launch their own devices with similar features and capabilities.

Real-Time Operating System (RTOS) encompasses proprietary operating systems that also allow for third party applications on smartwatches. A prime example is Garmin's suite of devices that connect to the company's library of third party applications called Garmin IQ. IDC expects more vendors - particularly those specializing in fitness trackers - to follow suit with this same strategy in the years to come. This will help RTOS to emerge as the second-fastest growing platform in the worldwide smartwatch market.

Others includes Linux and Pebble OS, two platforms that are expected to decline over the course of the forecast period due to increasing pressure from market leaders. Still, these will appeal to select segments of the market, particularly brand loyalists and gadget tinkerers.

* Forecast values.

Table Notes:

• Data is subject to change.
• Vendor shipments are branded device shipments and exclude OEM sales for all vendors.
• The sum of basic wearables and smart watches do not equal total wearable volumes due to other smart wearables (i.e. eyewear, wristbands) not included in the smartwatch numbers.
• The "Vendor" represents the current parent company (or holding company) for all brands owned and operated as a subsidiary.
• The table represents a combination of both basic and smart wearable devices.

In addition to the table above, an interactive graphic showing worldwide unit shipments for smartwatches, other smart wearable devices, and basic wearables for 2015, 2016, and 2017 is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

About IDC Trackers
IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad. The IDC Tracker Chart app is also available for Android Phones and Android Tablets.

For more information about IDC's Worldwide Quarterly Mobile Phone (News - Alert) Tracker, please contact Kathy Nagamine at 650-350-6423 or [email protected].

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter (News - Alert) at @IDC.

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160915005309/en/

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