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Wearable tech is maturing, but is still out of the mainstream, says GlobalData

Wearable technology
is an emerging sub-market in the Internet of Things (IoT) theme, but is yet to
establish itself in the IoT mainstream due to limited interoperability and
underdeveloped self-contained functionalities, according to GlobalData, a leading
data and analytics company.

GlobalData’s Wearable Tech – Thematic Research predicts that the market will grow at a compound annual growth rate (CAGR) of 19% between 2018 and 2023, primarily driven by smartwatches, which account for the lion’s share of the market revenue.

Competition in
wearable tech is primarily a face-off between US and Chinese tech giants. Apple
is the dominant player, thanks to the success of the Apple Watch, and its
strong position in the hearables segment, where AirPods are leading the market.
The smartwatches are now the dominant wearable tech segment while fitness
trackers are less promising today than they did four years back.

Fitness trackers are losing out to smartwatches when it comes to sales, but daily usage rates (at least in mature economies) are on the rise. Many fitness tracker companies are exploring growth opportunities in healthcare services. Google’s acquisition of Fitbit in 2019, to some extent, is attributed to Fitbit’s stronghold in the US healthcare services market.

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Rupantar Guha, Senior
Analyst of Thematic Research at GlobalData, says: “The demand for fitness
trackers is growing in Asia-Pacific (APAC) while their sales in North America
and Europe are declining. Smartwatches are also gaining traction, driven by the
emergence of low-cost Chinese products in APAC. In terms of regulations, APAC
is still far from adopting the EU’s GDPR standard, which makes the region an
attractive market for wearable vendors keen to exploit customer data.”

Emerging markets,
especially in APAC, present the strongest growth opportunities for wearables.
But in the key markets of China and India, global leaders face increased competition
from domestic manufacturers. The region’s large number of price-sensitive
consumers often cannot afford the most expensive smartwatches.

Fitness trackers are
often seen as a cheap alternative. Indian manufacturer Titan’s fitness tracker
is a prominent challenger to Google’s Fitbit. While many consumers cannot
afford the latest Apple Watch, there is an untapped demand for cheaper
smartwatches. Chinese brands like Xiaomi, Huami and Huawei, with less-expensive
smartwatch models, are aiming for growth in this space.

Guha continues: “Apple
will continue to lead by revenue due to the premium price-tag of Apple watches
and a growing dedicated customer base in the region.”

Hearables—wireless,
in-ear headphones—and smart glasses are gaining significant media attention.
Hearable vendors are investigating expanding use cases from listening to music
and taking voice calls to fitness monitoring. Hearables are expected to exceed
smartwatch performance for health monitoring services. At present, consumer
adoption of smart glasses remains low due to consumer ambivalence that stems
from high-cost, privacy concerns and limited use cases.

Guha concludes: “Wearables
collect significant amounts of personal data, which makes them targets for
regulators. Compelled by the EU’s General Data Protection Regulation (GDPR),
wearable vendors like Strava, Fitbit, Garmin and Oculus have redesigned their
privacy policies. Vendors with transparent data policies will gain consumer
trust and this will, in turn, drive sales of their devices.

“APAC is fairly
relaxed in terms of data privacy laws, and as a result more wearable vendors
will seek expansion in this market over the next two years. Yet, companies will
have to be prepared to comply with emerging and increasingly stringent domestic
regulations that (most likely) will vary from one country to another.”

Source: GlobalData