Wearing your health on your sleeve

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The corporate embrace of ‘wellness’ has proved a boon for a stagnant wearables market, says Billy MacInnes

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Billy

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6 September 2019 | 0

I must confess that it’s been a while since I last looked at the subject of wearables in this esteemed organ. Two years in fact. Back in 2017, the wearables segment was coming out of a significant slowdown in 2016 after reaching a growth rate of nearly 172% in 2015. But the outlook for 2017 and beyond was very rosy with IDC forecasting a compound annual growth rate of 18.3% from 2016 to 2021.

One of the major weaknesses that dogged the wearables market was that, in the words of Ramon T. Llamas, research manager at IDC’s Wearables team, the devices offered a “limited and unclear value proposition to a broad base of potential users”. Worse still, while they performed a number of functions, “none of them worked exceptionally well to accomplish a myriad of tasks”. That confusion was highlighted by a survey of over 9,500 people in the US, UK and Australia conducted by Gartner in 2016, which found nearly a third of users abandoned their smart watches and fitness trackers.

So where are we now? In November last year, Gartner forecast that the market for wearable devices would grow by 26% this year to 225 million units, with user spending on devices reaching $42 billion. It predicted that 74 million smartwatches would be shipped in 2019, accounting for $16.2 billion of spending and making them the largest segment in the wearable device market.

In June this year, IDC revealed that global shipments of wearable devices had reached 49.6 million units in the first quarter of 2019, an increase of more than 55% on the same quarter in 2018. Smartwatches and wristbands accounted for 63.2% of all wearables while ear-worn devices grew 135.1% to 34.6% of all shipments. Apple accounted for 26% of the market in the quarter, double second placed Xiaomi’s 13% share.

Watch and listen

In the same month, IDC predicted the market for wearable devices would hit 222.9 million devices this year, growing to 302.3 million units by 2023. It claimed that smartwatches and ear-worn devices would account for more than 70% of all wearable shipments by 2023. Shipments of smartwatches would grow over that time period from 91.8 million units to 131.6 million while ear-worn devices would increase from 72 million units to 105.3 million.

Llamas commented that the proliferation of devices would be accompanied by an expansion in use case for wearables. “Smartwatches, as always, will still tell you the time, but will move deeper into health and fitness and connect with multiple applications and systems, both at work and within the home,” he said. “Ear-worn devices, while still centered on providing audio, will nudge into other areas like language translation, smart assistant deployment, and coaching.”

Vincent Thielke, research analyst at Canalys, believes that the channel has an important role to play in the distribution of wearables to help vendors improve their reach. While the arrival of LTE smartwatches has already created significant opportunity for carriers in Asia and North America, they have also started to gain a presence in Germany, Italy and France. Ireland is still waiting for LTE watches from Apple and Samsung.

Distributors and channel partners are going to be important partners for wearables on the B2B side, Thielke says, because of interest in corporate wellness programmes and customised workflows in areas like hospitality, retail, and banking. Corporate wellness is also an attractive opportunity for wearables. B2B applications may also need to be specifically tailored to requirements for enterprise customers. “The applications may also be developed and then deployed to many different businesses in the case of workplace wellness initiatives. For channel partners, the main opportunity is to distribute these devices along with the app/platform,” he adds.

Offering a channel perspective, Hannah Buttle, Tech Data manager for wearables, reveals that the distributor is “seeing growth in multiple sales channels across Ireland and the UK”. These include retail, E-tail and B2B. Corporate health and wellness is “a huge priority for some businesses, improving morale and reducing sickness in some cases”. She believes that “demand for smart tech is a massive driver for consumer spending with double digit growth [driven by] the ease of access and affordability of these high-demand products”.

Big growth in-ear

One last point of interest regarding wearables is Gartner’s expectation that shipments of ear-worn devices (‘hearables’) will overtake smartwatches in 2022. It predicts 158 million units of wearables will be shipped that year, compared to 115 million smartwatches. It believes that the use of hearables will move beyond fitness and health coaching, communications and entertainment, hearing aids and medical devices to accommodate virtual personal assistants that can handle a multitude of tasks such as queries and hands-free directions.

“Moving forward, advanced ear-worn devices can reduce smartphone use,” Gartner says, “as they will take over many tasks that users solve with the help of their smartphones today.”

Hear, hear.

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