Smartwatch prices to drop by 2022

$16.2 billion will be spent on smartwatches next year, says Gartner.

Worldwide shipments of wearable devices will reach 225 million units in 2019, an increase of 25.8% from 2018.

This is according to market analyst firm Gartner, which notes end-user spending on wearable devices is forecast to reach $42 billion in 2019. Of that, $16.2 billion will be on smartwatches.

"At the moment, the smartwatch market is bolstered by the relatively stable and higher average selling price (ASP) of the Apple Watch," says Alan Antin, senior director at Gartner.

"But the overall ASP of smartwatches is expected to slowly decline from $221.99 in 2018 to $210 in 2022, due to lower-priced competitors and as higher volumes lead to reductions in manufacturing and component costs, while strong brands like Apple and traditional watch brands try to keep pricing stable."

Gartner points out that in 2019, 74 million smartwatches will be shipped, which makes smartwatches the top segment of all wearable device form factors.

However, it predicts that by 2022, ear-worn devices (hearables) shipments will take over as the top wearables segment with 158 million units shipped, compared with 115 million smartwatch shipments in 2022.

As the smartwatch segment continues to mature, Gartner says it will subdivide into four main types of providers: leading consumer electronics brands, fashion and traditional watch brands, children's watches, as well as special-purpose brands and start-ups that cater to niche audiences such as people with medical issues that need to be monitored.

While consumer electronic brands such as Apple, Fitbit and Samsung have a comfortable lead, other brands are gearing up, the market analyst firm says.

"Traditional watch brands such as Fossil and Casio will gain market share by offering more style and choice in their portfolio than the technology brands," says Antin. "We think that fashion and traditional watch brands are likely to account for up to 20% of unit shipments by 2022."

Gartner predicts that by 2022, ear-worn devices, such as Apple AirPods, Samsung's IconX and Plantronics' BackBeat FIT, will account for more than 30% of all shipped wearables, as their capabilities expand beyond communication and entertainment.

Currently, the main use cases for ear-worn wearables are fitness and health coaching, communications and entertainment, hearing aids/medical devices, and professional, says Gartner.

It adds that future generations of ear-worn devices will be able to accommodate virtual personal assistants and subsequently be used for a multitude of tasks, such as queries and hands-free directions.

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

According to Gartner, immersive head-mounted displays (HMDs) are primarily used to experience augmented reality or virtual reality (VR). Mainstream consumer use has been limited due to availability, cost, ergonomics, unfashionable design and other factors. The main driver for AR HMDs is enterprise usage, where they are used internally as hands-free tools for business process improvement and training.

The main use case for VR HMDs is entertainment and gaming. However, there continues to be a mismatch between expectations and what the current technology can deliver, says Gartner, adding that this will change, but for a price.

"Contrary to what we see in other segments, the ASP for HMDs will increase by 19.2% until 2022, as better content demands better technology," Antin concludes.

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