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Apple Helps Wearables Revenue Accelerate Year-on-Year, While Value Migrates to Smartwatch, and Dedicated Fitness Revenues Slow
Wearables Market Analysis and Commentary
23 Jun 2016 - In Q1 2016, worldwide revenue for wearable devices surged 133% to nearly $6 billion (at retail) year-on-year, fuelled by connected watches, notably as Apple Watch passes its 1st birthday. Units grew significantly less than value, representing 50% uplift in the average price paid for a wearable device, to $218.
Within the health & fitness category, activity trackers continue to be the standout performer, with volumes growing 18% in the quarter, to reach 10.7 million units, while sports watches with GPS and heart-rate monitoring (using chest-straps) grew 11%. Fitbit and Xiaomi commanded more than 70% share of activity tracker volumes while Garmin, Polar and Suunto remained the most popular brands in sports watches, used by fitness enthusiasts and endurance athletes.
"Unit growth for activity trackers has come at the expense of tumbling prices and ultimately rapid feature commoditisation - average prices for the category fell 40% in 2015, versus 2014," commented Mariia Konovalova, Research Analyst at Futuresource Consulting.
With falling prices and value migrating to connected watches, overall spend on health & fitness wearables grew only 2% in 2015 and are expected to witness similar underwhelming growth this year, despite unit and penetration growth. As a result, vendors are focusing efforts on additional revenue streams such as accessories (bands, etc.), in-app engagement, emerging markets (where penetration is almost zero), and repositioning in to watches and jewellery.
"A number of brands from the world of tech and fashion are manoeuvring for position with partnerships and acquisitions - Nokia buying French wearable-health Withings, Fossil acquired Misfit, and Fitbit recently acquired Coin which will allow them to add payment technology to their devices," added Konovalova.
While Apple Watch uptake continues to fall short of early forecasts, Apple already ranks among the largest watchmakers in the world in revenue terms, behind giants Swatch and Rolex, and ahead of Fossil, Citizen, Casio, Richemont, LVMH and other well-known heavyweights in watch making. This serves as a stark reminder of Apple's global reach and pull and how smartphones have redefined market success, in terms of scale and rate of adoption.
These global insights are in the latest quarterly results from Futuresource Consulting's global wearables report, which focuses on the total market size, sales, forecasts, product type and technologies. Its detailed tracking of the wearables landscape provides a snapshot of the current market status, analysis of the latest trends as well providing longer term forecasts.
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