Android Wear smartwatch

Research specialist Gartner is throwing its weight behind smartwatches to make more of an impact in a wearables market currently dominated by low-cost fitness bands.

Should Fitbit be worried? Probably not. Gartner expects 274.6m wearable electronic devices to be sold worldwide in 2016, an increase of 18.4% from 232m units in 2015. Sales of wearable electronic devices will generate revenue of $28.7bn in 2016. Of that, $11.5bn will be from smartwatches, which leaves an awful lot of money for fitness bands too.

“From 2015 through 2017, smartwatch adoption will have 48% growth largely due to Apple popularising wearables as a lifestyle trend,” Gartner’s research director Angela McIntyre said. “Smartwatches have the greatest revenue potential among all wearables through 2019, reaching $17.5bn.” And that’s no surprise given the huge number of brands entering the smartwatch sector this year.

But she added: “Though the sales of smartwatches are the one of the strongest types of wearables, their adoption will remain much below sales of smartphones. For example, in 2016 more than 374m smartphones will sell in mature market countries and in large urban areas of emerging market countries, for example, in Hong Kong and Singapore.”

And the rest of the market?

Fitness wearables — which include wristbands, smart garments, chest straps, sports watches and other fitness monitors — continue to increase in popularity, driven in some part by US wellness programmes. But watches and fitness bands are where the big money sits.

Apple Watch

“Of all the fitness wearables, sports watches will be the one product category to maintain its average retail price over the next several years,” said McIntyre. “Race runners, cyclists and divers will choose sports watches over smartwatches because the user interface, capabilities and durability are tailored to the needs of an athlete in their sport. Continued advances in sensors and analytics for sports watches will bring new capabilities that bolster average retail prices.”

Although the size of the worldwide wristband market was on par with the unit sales of smartwatches in 2015, Gartner said smartwatches will have stronger appeal with consumers as they typically have more multifunctional devices that can track exercise.

Wristband providers are experimenting with how to compete with smartwatches and take market share from the market leader, Fitbit. Examples of emerging value propositions for wristbands beyond fitness include mobile payments, access, safety, wellness and health.

Fitbit

Head-mounted displays (HMDs) are an emerging market with origins as expensive military projects, and in 2016 the HMD market will progress toward mainstream adoption for consumers and enterprise use. “New virtual reality HMDs for consumers, such as the HTC Vive, Oculus Rift, Sony PlayStation VR, and Microsoft HoloLens are expected to be available along with video games and entertainment content as well as business applications critical for their success,” said Brian Blau, another research director at Gartner. “Film producers and sports leagues will augment their traditional content through HMDs to enhance their customer experiences by creating interactive attractions, movies, and sporting events that make the content more personal and meaningful.”

Enterprise use of HMDs will also grow in the coming years with 26% of HMDs designed for business use in 2018. HMDs will be purchased by businesses for use by employees for tasks such as equipment repair, inspections and maintenance. Workers also will use HMDs for viewing instructions and directions hands free while they are performing a task.

Google Glass