What size to wear? Wearable Technology Market Data

This is a summary of the key wearable technology market data, forecasts and trends, together with an assessment and critique of the accuracy and methodology of the predictions.

The good news is that without exception market analysts, researchers and pundits all agree that the market for wearable technology is going to be significant ( >$5 Billion in 2016 by some market estimates). With individual sub-segments such as "SmartWatch" already approaching the $1 Billion mark.

The bad news is that very few of these predictions are based on reliable data and sound methodology, and many predictions are simply pure speculation. A good rule of thumb when evaluating market data is to subtract one year from the date of publication of the report, and assume that any data later than this date represents at best a trended data extrapolation, and at worst, the personal opinion of the author.

This situation is normal for new products and technologies. Because the market is new and many of the underlying technologies (e.g. battery), key products and even market categories are still evolving, there is little or no relevant historical data to rely upon.  However, there are a few relevant industry metrics and key trends that can be used to provide reliable guidance (i.e. early warning indicators) to the future evolution of the market, and to help in sizing the market opportunity for specific wearable technology market sub-segments.

The future is (almost always) further away than you think!  The predicted rapid (exponential) growth for wearable technology may turn out to be accurate ... just delayed.  It is a common feature of new technology markets that initial adoption rates may take longer to translate into broader market uptake., pushing overall market growth back by a year or more.  However, as the saying goes "the early bird gets the worm"  ... although you should be mindful of the alternate saying ... "but the second mouse gets the cheese".  So your goal should be to be the early bird, and not the first mouse.

Here are some of the market numbers that commonly appear in the industry press:

"Worldwide Wearables Market Forecast to Reach 45.7 Million Units Shipped in 2015 and 126.1 Million Units in 2019," - Source: IDC Worldwide Quarterly Wearable Device Tracker,

(Units in Millions) 

Product Category	2014 Shipment Volumes	2014 Market Share	2015 Shipment Volumes*	2015 Market Share*	2019 Shipment Volumes*	2019 Market Share*
Wristwear	17.7	90.4%	40.7	89.2%	101.4	80.4%
Modular	1.6	8.3%	2.6	5.7%	6.7	5.3%
Clothing	0.0	0.1%	0.2	0.4%	5.6	4.5%
Eyewear	0.1	0.3%	1.0	2.2%	4.5	3.5%
Earwear	0.0	0.0%	0.1	0.1%	0.6	0.5%
Other	0.2	0.9%	1.1	2.4%	7.3	5.8%
TOTAL	19.6	100.0%	45.7	100.0%	126.1	100.0%

"Wearable Technology Market to Exceed $6 Billion by 2016” - Source: IMS Research

“The next-gen wearable devices market, including smart glasses, to be worth more than $1.5 billion by 2014, up from just $800 million in 2013.” - Source:  Juniper Research

"Wearable Technologies Devices, like Apple´s iWatch, will exceed 485 Million annual shipments by 2018“  - Source: ABI Research

"The global smart textiles market was valued at USD 795 Million in 2014 and is expected to reach USD 4.72 Billion by 2020, at a CAGR of 33.58% between 2015 and 2020. Smart textiles in the military and protection sector accounted for the largest share of about 27% of the total market. However, the market for the sports and fitness segment is expected to grow at the highest CAGR of 40.30% between 2015 and 2020." - Source:  Markets and Market Research

What to look out for ... follow the money not the sheep!

The most reliable lead indicators of a growing market are:

• Actual shipments of lead products in each market category segment (e.g. early unit shipments of Apple iWatch), since these numbers are accurately known, objective, and the early trend can at least give some indication of the initial market acceptance for the product.
• The "collective" wisdom and level of activity of key industry analysts and market research groups (such as IDC, Forrester Research, Juniper etc.).  Look for consistency and soundness of their analysis and research methodology, and mark down speculative estimates.
• The level of Venture Capital interest and investment in start-ups and/or technologies that are relevant to wearable technologies.  Analysis of this data is particularly useful for longer term market health and growth characteristics.  Commercial sources for this type of information include CBInsights Venture Capital Database and the Dow Jones VentureSource.
• Strategic announcements and/or acquisitions by leading brands, vendors, or manufacturers related to wearable technologies (e.g. Apple, Samsung, Google, Intel etc.).
• Increases in research activity, initiatives, and/or funding by leading research institutions into the wearable technology market (e.g. MIT Media Lab).  
• Formation of and/or re-prioritisation of key industry associations in relation to the wearables technology market (e.g. CTIA), as evidenced through strategic announcements and/or the content and focus of industry conferences and exhibitions (such as CES).

Source:  CBInsights Venture Capital Database

Understand the Customer.  For specific market sub-segments and products, the best market growth indicators are those that seek to analyse and/or measure the actual "Customer Value Proposition".  These include:

• Quantitative analysis of the "number" and "quality" of vendors that offering product in the segment
• Industry analyst technical "tear-downs" or "in-depth" testing of new products.  A good source for these types of analysis in the consumer technology segment is CNET.
• Surveys of consumer/user perceptions and attitudes towards particular products or product category.  A good starting point for this is the Pew Research Center.
• Conducting formal "Habits and Practices" (ethnographic) research to better understand the underlying customer needs and requirements for a wearable technology product.
• Formal analysis of "social media and key influencer traffic/sentiments" towards particular products, product categories and/or related technologies.  Several companies offer commercial products and services for social media monitoring, but there are also a wide range of free social media monitoring tools and services that can be used.
• Evaluation of the market adoption and characteristics of adjacent markets or related products (e.g. the adoption of health monitor bands in the medical market; use of Virtual Reality glasses in the entertainment or industrial market contexts).  Note that these products often represent "extreme" usage scenarios from a general customer value proposition perspective, but may provide some insight into the benefits and barriers to broader market acceptance.