Apple's entry into smartwatch market to drive consumer interest
The smartwatch market will grow from 3.6m unit shipments in 2014, to 101m shipments in 2020, according to a report released by IHS. Apple’s entry into the smartwatch market will benefit all suppliers as marketing raises consumer awareness and explains the benefits clearly. The Apple Watch will leave an enormous addressable market untapped, because it requires a modern iPhone and has a starting price of $349.
The 2bn Android smartphone users and those Apple customers unwilling to spend so much on a smartwatch is a large target for Android smartwatch makers.
In the IHS baseline smartwatch forecast, Apple’s 2015 Apple Watch shipments will hit 19m units, or 56% of the total smartwatch market. Over time, IHS forecasts Apple’s share of the market will fall to 38% in 2020 as other smartwatch makers refine their products and successfully serve the vast Android smartphone market, which Apple chooses not to address. Google’s Android Wear will ship 96m units over the next five years, leveraging the vast Android smartphone installed base. Should Google add iPhone support, it will increase its addressable market still further, the IHS report says.
Apple has an advantage in smartwatches because of the quality and range of apps for iOS devices such as the iPhone and the iPad. Similarly, Google has a head start because of the Google Play Android app store. Device makers may find tactical success in the short run with proprietary OS platforms such as Pebble or niche open platforms such as Tizen which Samsung supports. But in the long term, only standard platforms that are supported by many hardware makers will deliver sufficient scale to prove attractive to app makers. Because of weak app ecosystems, IHS forecasts other smartwatch OS devices, excluding Apple and Android Wear, to amount to just 40% of smartwatch shipments in 2020.
“Apple Watch success will drive the overall smartwatch market,” said Antonios Maroulis, analyst at IHS Technology. “The smartwatch will become a key accessory device offered by most leading smartphone manufacturers seeking to dominate this new profitable market. We forecast the ratio of smartwatch shipments to smartphone shipments will increase from 1:500 to 1:20 between 2014 and 2020. Delivering a wide range of apps will be critical for smartwatch success. Apple’s and Google’s success with existing smartphone application stores will give them an invaluable head start over challengers.”
“Should Apple stumble with its foray into smartwatches, the smartwatch market will suffer similarly. Smartwatches could then follow the fate of Google Glass. Without Apple and its marketing strength, the smartwatch category needs greater marketing spend from other smartwatch makers to overcome damage to consumer perceptions,” forecasts Ian Fogg, Senior Director of Mobile & Telecomms, IHS. “Apple’s smartwatch competitors need the Apple Watch to succeed.”