A major upward trend in sales of wearable electronic devices is expected, with sales of smart watches, wristbands and connected glasses rising to 123 million in 2018.
France-based IDATE, one of Europe’s leading digital economy think tanks, has just published its latest report, focusing on developments in the wearables market up to 2018. Although we are likely to see considerable development in these devices – in terms of both functionality and design – in the next few years, IDATE has attempted to trace the future market trends. The forecast is that 123 million wearables will be sold in 2018, representing a 70% compound annual growth rate over the estimated 20 million-plus devices sold in 2014. The IDATE experts believe that the key to success for these connected objects lies 1) in having an effective business model and 2) in the longer term, in finding spinoffs and outlets that go beyond people’s individual use of this equipment.
Smart watches the flagship product in the coming years
One of IDATE’s initial conclusions is that sales of basic connected wristbands will fall dramatically by 2017, as their main features will probably by then be embedded in other devices such as smartphones, tablets and smart watches, while economies of scale are likely to bring down the cost of smart watches, reckons the digital think tank.
Meanwhile there is a big question mark over connected glasses and it seems increasingly likely that sales may never take off at all. A vicious circle is being created by the apparent lack of developer interest in these devices. The high price tag – on average around $1,500 – is making developers wary of creating apps for a product many people cannot afford, while consumers will not be encouraged to purchase a connected device without a range of useful apps available. Nevertheless IDATE sees the possibility that a niche market will develop over the next three years.
By contrast, the IDATE analysts reckon that smart watches have now really begun to catch on and predict that by 2018 they will account for 65% of the total wearables market. The Apple Watch, scheduled to be launched in Europe in the spring, has already created a great deal of buzz and expectation among consumers and sales are likely to be high in terms of both volume and value. Moreover, connected watches might well “take over from the smartphone” as the default screen for consumers, suggests IDATE consultant and report project leader Samuel Ropert. After all, you can check your email and text messages on your smart watch, something you cannot do on your connected wristband.
Consumer Electronics booming
The wider Consumer Electronics (CE) sector also looks set to show strong growth. Sales of CE devices are forecast to grow from 2.4 billion units in 2014 to 3.6 billion in 2018 – i.e. by an average of 8.6% year-on-year. Portable media devices – mainly smartphones and tablets – and digital media devices such as home consoles and Blu-ray players are seen as the main drivers of this surge, posting 12.3% and 9.8% annual growth respectively.
A recovery in sales of televisions is also predicted from 2016 onwards as the price of UHD and OLED TV sets falls, and value-added smart TVs come on to the market. However, sales of computers will start to shrink this year. Sales have already been falling by 4.2% per year on average as they are nudged out by the increasingly-popular tablet. Laurent Michaud, Head of Consumer Electronics & Digital Entertainment at IDATE, believes that the tablet is poised to replace the personal computer in the home as tablets are more suited to domestic needs, especially browsing and fast information-sharing. However, even if people do start to turn their back on PCs for personal use, computers are unlikely to lose pride of place in business, as they can still offer more advanced functionality, the IDATE experts point out.