Wearable Technology Market Suited for Rapid Growth
Encompassing such varied products as augmented-reality eyeglasses, cocktail dresses that light up when a cell phone rings and sports bras that monitor heart rates, the wearable technology market is on the fast track with growth, with shipments likely to rise by more than 500 percent from 2011 to 2016.
In 2011, 14 million wearable technology devices were estimated to have been shipped, according to a new report from IMS Research, recently acquired by IHS (NYSE: IHS).However, by 2016, shipments will increase to 92.5 million units, based on the most likely forecast scenario from IMS Research, as presented in the figure below.
“Wearable technologies provide a range of benefits to users, from informing and entertaining, to monitoring health, to improving fitness, to enhancing military and industry applications,” said Theo Ahadome, senior analyst for medical research at IMS Research. “Because of all these uses, IMS Research foresees major potential for growth in all kinds of wearable technology products.”
If the technology fits, wear it
Wearable technology includes products that are worn on an individual’s body for extended periods of time, significantly enhancing the user experience via features including advanced circuitry, wireless connectivity and independent-processing capability.
Wearable technology fits into four different categories: fitness and wellness, healthcare and medical, industrial and military, and infotainment.
Fitness and wellness wearable technology products are used to monitor activity and emotions, while healthcare and medical devices monitor vital signs and augment senses. Industrial and military wearable technology receives and transmits real-time data in military or industrial environments. Infotainment technology is used to receive and transmit real-time information for entertainment and enhanced-lifestyle purposes.
With the wearable technology segment so broad in terms of products and applications, IHS has developed three scenarios for growth in the coming years: a pessimistic low-end outlook, a most likely midrange forecast and an optimistic, high-end prediction.
The low-end forecast calls for shipments to rise to only 39.2 million in 2016, and presumes wearable technology market growth will be limited by factors such as a lack of product availability, poor user adoption and deficient overall experience. Still, even with these challenges, shipped devices could grow by nearly threefold between 2011 and 2016.
The midrange, most likely scenario described at the opening of this release presumes there will be some market constraints including the lack of reimbursement in medical applications and a paucity in product introductions by major suppliers. However, these will be offset by the improved functionality of non-wearable devices—which helps explain the bigger numbers over the low-end forecast.
The optimistic scenario is one where significant progress and success has been achieved in wearable technology, including the introduction of new products and widespread availability from major brands. In this scenario, 171 million devices will ship in 2016—a whopping twelvefold expansion from last year.
Notwithstanding the growth figures, these various scenarios reflect continuing uncertainty over the long-term future of wearable technology and the varying factors that affect future outcomes.
The highest revenue-generating areas last year for wearable products were in two segments—healthcare and medical on the one hand, and fitness and wellness on the other.
In both these segments, continuous-glucose monitors were the highest-grossing device for revenue.
The need for continuous data on blood glucose levels, particularly Type I diabetes patients, has become critical in the treatment of the disease, providing impetus for monitor devices. Medtronic, Abbott and C8 MediSensor are the companies playing heavily in this field.
In the low-end forecast, both segments are expected to continue to account for the highest share of revenue until 2016. In the midrange forecast, infotainment will overtake fitness and wellness to become the second-largest application area in terms of revenue, driven by robust growth in the area of smart watches.
Healthcare and medical will continue to be the largest application area in both low-end and midrange forecasts.
In the high-end forecast, infotainment is projected to account for the largest revenue share of 38 percent by 2016, driven by the uptake of smart watches and smart glasses.
The United States is the leading region for wearable devices at present. This won’t change anytime soon, as IHS forecasts the U.S. will continue to be the largest geographic region for wearable technology through 2016. Europe, meanwhile, is growing its share of revenue for wearable devices and will be the second-largest region by 2016, most notably in the healthcare and medical application area. This is because healthcare providers there are expected to respond to the successful cases recorded in the U.S.
For the rest of world, Japan is expected to constitute the major market, particularly in the infotainment area.
About IHS (www.ihs.com)
IHS (NYSE: IHS) is the leading source of information and insight in critical areas that shape today’s business landscape, including energy and power; design and supply chain; defense, risk and security; environmental, health and safety (EHS) and sustainability; country and industry forecasting; and commodities, pricing and cost. Businesses and governments around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 6,000 people in more than 30 countries around the world.
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About IMS Research (www.imsresearch.com)
IMS Research, recently acquired by IHS (NYSE: IHS), is a leading supplier of market research and consultancy to over 2500 clients worldwide, including most of the world’s largest technology companies. Established in the UK in 1989, IMS Research now has dedicated analyst teams focused on the factory automation, automotive, communications, computer, consumer, display, financial & ID, LED & lighting, medical, power & energy, solar PV, smart grid and security markets. Currently publishing over 350 different syndicated report titles each year, these in-depth publications are used by major electronics and industrial companies to assess market trends, solve marketing problems, and improve the efficiency of their businesses.