Brands struggling to get their arms around emerging technologies such as smartwatches or virtual and augmented reality headsets have a short window to figure it out: Consumer interest is set to jump over the next four years, according to new reports from research and analytics firm International Data Corporation.
IDC expects shipments of wearable devices to practically double by 2021, going from 113.2 million shipments in 2017 to 222.3 million. Watches, both the smart and traditional variety, will drive the market, said the firm, which figures that they’ll grow from 61.5 million units in 2017 to 149.5 million in 2021.
The firm credits the fashion industry for this boost, as well as the trend of packing in cellular connectivity, so the devices don’t require a companion smartphone.
“The move from wristbands to watches introduces additional revenue opportunities for vendors and distributors as average selling prices are expected to rise,” said Jitesh Ubrani, IDC’s senior research analyst for mobile device trackers. “However, the struggle to move beyond health and fitness persists and convincing consumers to spend more for utility that may not be immediately obvious will be a challenge.
“This is where fashion-forward brands have a chance to shine as their customer base doesn’t tend to prioritize features,” he added.
Compared to smartwatches, total expected shipments for VR/AR are smaller. However, the growth trajectory by 2021 looks far steeper: IDC believes these headset shipments will go from 9.6 million units in 2017 to 59.2 million by 2021.
The reason: So far, the market has been driven by low-cost VR devices like the Samsung Gear VR, a wire-free smartphone-based headset powered by Galaxy smartphones. Bundled headset-plus-phone deals by the electronics giant and others introduced consumers to the tech. But over time, interest will turn to more robust features and more powerful hardware options, such as standalone headsets and goggles tethered to desktop-based systems.
IDC figures “screenless” phone-based headsets will account for 14.8 percent of the entire market in 2021, down from 58.8 percent in 2017. Instead, tethered units from companies such as Sony and Meta are expected to dominate, with a majority of shipments. By then, standalone headsets — like the Oculus Go or Microsoft’s augmented reality device, Hololens, will account for nearly half of the VR/AR headset market.
This industry “is in the midst of a crucial transition as buyers are gravitating toward tethered headset and PC or game console bundles that offer advanced tracking and higher fidelity rather than settling for low-cost headset and smartphone bundles,” said Ubrani. “This bodes well for the entire VR ecosystem as the improved experience of a dedicated device draws a more dedicated audience.” Enterprise uses will also buoy sales, the report noted.
For AR, workplace adoption will be a major factor in its traction. “AR will introduce technology to a large portion of the work force that was never able to benefit from technological advances because of the need to use their hands to complete their job functionality,” said Ryan Reith, program vice president with IDC’s worldwide quarterly mobile device trackers.
“AR will change all that,” he said. “And within VR, the commercial use cases that are emerging the fastest are within education, design/content creation and retail, and we have strong reason to believe this is just the tip of the iceberg.”