Smartwatches, and the Apple Watch in particular, will be the device category that drives overall growth in the wearables market over the next five years. Wearable computer shipments will grow 22% per year on average through 2020 to reach 235 million units shipped annually in that year.
Smartwatches will grow 25% per year on average through 2020 and will make up 52% of total wearables shipments in that year.
Fitness bands have more limited functionality and will cater to a more niche, health-focused audience.
Apple Watch will compete not only with other smartwatches but in the traditional luxury-wristwatch category as well. We forecast 15 million Apple Watch shipments in 2015, and compound average growth of 24% per year through 2020.
The three Apple Watch models will carry high prices compared to other smartwatches. We expect the Sport edition to cost $349. We predict the two higher-end Apple Watches — the Watch and the Watch Edition with a solid-gold body — will be priced at $549 and $2,499, respectively. Computing functionality will be the same across all three devices, and the higher-end devices will sell to consumers based on luxury materials and design.
While the Apple Watch will be expensive compared to other smartwatches, it will fall in line with pricing for mid-range luxury wristwatches. The fastest-growing category of sales for Swiss-watch exporters are in the middle price ranges, and not in the ultra-high price category, where watches retail for $10,000 and above. This middle range is also where the Apple Watch seems to be aiming, with the possible exception of the Edition.
By 2020, Apple Watch shipments will be equivalent to about two-fifths of the luxury-watch market. Assuming a lower-bound price of $350 for the luxury-watch category, and including Apple Watch in that category, traditional wristwatches would account for ~60% of total shipments in 2020, while Apple Watch would account for ~40%.
The luxury watch market is dominated by consumer markets in Asia and Europe. Asia accounts for 53% of Swiss watch exports. We expect Apple to push [...]