The global demand for wearables faced a noticeable slowdown in growth, with growth dropping to 14.6 percent in 2022 from a robust 27.7 percent in 2021.
The aftermath of the economic downturn and reduced spending following the peak of the COVID-19 pandemic contributed to this deceleration. This trend in wearables market persisted into the first half of 2023, driven by extended replacement cycles and a lack of compelling features that stifled consumer interest.
However, ABI Research, a leading technology intelligence firm, anticipates a positive trajectory for the wearables market in the years ahead. The firm projects a resurgence in the overall market, with an estimated 689.33 million shipments by the close of 2028, showcasing a Compound Annual Growth Rate (CAGR) of 11.3 percent between 2023 and 2028.
In 2023, the wearables market is set to rebound, with a projected year-on-year growth of approximately 10.2 percent, resulting in over 400 million units shipped. This growth is expected to regain momentum in the latter half of 2023 and sustain through subsequent years, driven by expanded use cases and the integration of wearable ecosystems.
Sachin Mehta, Senior Analyst at ABI Research, emphasizes that advancements in connectivity, integrated sensors, and the availability of advanced features at competitive price points will drive consumer interest and foster the wearables sector’s growth in the years to come.
In the first quarter of 2023, the smartwatch and activity fitness tracker segments experienced year-over-year declines of 3 percent and 9 percent respectively. These declines were attributed to seasonal factors and an excess inventory buildup within distribution channels. The smartwatch market is evolving rapidly, incorporating novel use cases, features, and sensors.
Notably, emerging markets such as India hold substantial growth potential, with India contributing a quarter of all global smartwatch shipments. Indian brand Fire-Boltt has remarkably surged to secure the second position in the global smartwatch market with a 10.1 percent share, trailing closely behind Apple (21.6 percent) and surpassing Samsung (9.2 percent).
While activity and fitness trackers face competition from smartwatches, they are expected to persist due to their appeal to a dedicated user base seeking simplicity and affordability with basic functionalities. Xiaomi led the activity and fitness tracker market in 2022 with a 35.2 percent share, followed by Huawei (23.7 percent) and Fitbit (15.8 percent).
A burgeoning category within wearables, smart rings, has witnessed a recent surge in demand, signaling future growth prospects. In 2022, 17.2 million smart rings were shipped, and this figure is projected to grow by 10.0 percent year-on-year, reaching 18.9 million units in 2023 and surpassing 50 million units by the close of 2028, exhibiting a CAGR of 21.9 percent between 2023 and 2028.
Despite their relatively recent emergence and niche status compared to other wearables, smart rings hold significant potential. They cater to diverse use cases, including contactless payments, access control, health tracking, and integration with smart home systems. However, their relatively higher cost due to premium materials, advanced sensors, and, in some cases, additional monthly subscriptions, makes them a relatively pricier option for the general consumer base.
The integration of 5G technology into wearables is anticipated to be a pivotal development, revolutionizing the capabilities and possibilities of these devices. The introduction of real-time data transmission and processing capacities through 5G will unlock a range of new functionalities and use cases for wearables.
Notably, the healthcare sector stands to benefit significantly, with remote patient monitoring and advancements in fitness applications on the horizon. As a result, high-end wearable sales are projected to experience a surge in demand as consumers seek out advanced use cases.
Sachin Mehta concludes that the implementation of 5G technology is poised to make a significant impact, driving innovation and fostering further growth in the wearables market, revolutionizing their capabilities and ushering in a new era of wearable technology.