Wearable devices are often considered the next major extension of mobile computing. However, many investors might not know much about this market beyond the Apple (NASDAQ:AAPL) Watch or Fitbit's (NYSE:FIT) fitness trackers. Therefore, let's dig deeper into this growing market and discuss 11 fascinating stats about it.
1. IDC expects worldwide wearable shipments to rise 38% to 110 million this year and exceed 237 million by 2020. The research firm believes that growth will be driven by an expanding lineup of vendors, new form factors like clothing and eyewear, and growing consumer awareness.
2. That market could grow at a CAGR of 17.8% between 2015 and 2020 and be worth $31 billion at the end of that period, according to research firm Markets and Markets. The firm believes that within that, sales in the Americas will rise the fastest, fueled by increasing consumer demand and new medical applications.
3. 71% of 16 to 24 year olds want a wearable device, according to a survey by GlobalWebIndex. This supports the notion that most wearable users are young -- a Nielsen survey in 2014 found that 48% of wearable users were between 18 and 34.
4. 69% of men are likely to buy a wearable device, compared to 54% of women, according to the GlobalWebIndex survey. This explains why several wearable leaders like Fitbit have released more fashion-friendly and feminine devices over the past year.
5. 29% of wearable buyers earn over $100,000 per year according to Nielsen. That explains why Apple heavily promoted the Apple Watch as a luxury product with high-end price points and positioned it as a fashionable device.
6. The Apple Watch controlled 41.3% of the smartwatch market in the third quarter according to IDC. However, that represents a big decline from its 70.2% share in the third quarter of 2015, and shipments fell 72% year-over-year.
7. Meanwhile, Garmin's (NASDAQ:GRMN) smartwatch shipments surged 324% annually during the quarter, boosting its market share to 20.5% and making it the second largest smartwatch maker after Apple. That growth was attributed to the expansion of its ConnectIQ app ecosystem, its focus on health and fitness instead of a wide variety of activities, and its new high-end Fenix Chronos smartwatches.
8. Fitbit remains the market leader in the overall (fitness trackers plus smartwatches) wearables market, with 25.4% market share during the second quarter according to IDC. It's followed by Xiaomi, Apple, Garmin, and Lifesense -- in that order. Fitbit's shipments rose 29% annually during that quarter, giving it the second best growth rate after Garmin, which reported 107% shipments growth on strong sales of its smartwatches and Vivoactive fitness trackers.
9. Salesforce reports that over 20% of companies are testing out wearable devices in basic uses like security access, employee time management, and real-time employee communication. That bodes well for Fitbit, which already convinced many companies to participate in its corporate wellness programs to reduce health insurance costs.
10. The number one reason for buying a wearable device is health and fitness, according to PwC. This indicates that demand for fitness-oriented devices from Fitbit and Garmin might keep rising, but sales of multi-use smartwatches might wane.
11. 51% of respondents in a Rackspace survey stated that privacy was a major barrier in the adoption of wearable devices. The recent Mirai botnet attack targeting IoT devices and the surge in data breaches also might make consumers think twice before upgrading their watches, glasses, accessories, and clothing to their "smarter" versions.
The key takeaways
The tech industry clearly has high hopes for the wearables market, but it still faces a lot of hurdles ahead. Questions about practicality, privacy, and security will likely throttle market growth, while a flood of cheaper devices could commoditize the market. Nonetheless, investors interested in this market should keep following rising stars like Apple, Fitbit, and Garmin -- and see which companies' strategies attract more consumers in the long run.