WearablesMarketForecastBI Intelligence

KEY POINTS

  • 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 [...]