Future business: it’s not just drones!

 

The latest report from Futuresource points to the business potential of wearables 0 particularly when integrated with digital signage and other communications resources through high-growth technologies including RFID and NFC.
In Q1 2016, worldwide revenue for wearable devices surged 133% to nearly $6 billion (retail) year-on-year, fuelled by connected watches (as Apple Watch passes its first birthday). Unit sales grew significantly less than value, representing 50% uplift in the average price paid for a wearable device to $218.

Within the health and fitness category, activity trackers continue to be the standout performer, with volumes growing 18% in the quarter, to reach 10.7 million units. Sports watches with GPS and heart-rate monitoring (using chest-straps) grew 11%. Fitbit and Xiaomi commanded more than 70% share of activity tracker volumes while Garmin, Polar and Suunto remained the most popular brands in sports watches, used by fitness enthusiasts and endurance athletes. Unit growth for activity trackers has come at the expense of tumbling prices and ultimately rapid feature commoditisation – average prices for the category fell 40% in 2015, versus 2014.
With falling prices and value migrating to connected watches, overall spend on health and fitness wearables grew only 2% in 2015, and are expected to witness similar underwhelming growth this year, despite unit and penetration growth. As a result, vendors are focusing efforts on additional revenue streams such as accessories (bands, etc.), in-app engagement, emerging markets (where penetration is almost zero) and repositioning in to watches and jewellery.
A number of brands from the world of tech and fashion are manoeuvring for position with partnerships and acquisitions – Nokia buying French wearable-health Withings, Fossil acquired Misfit, and Fitbit recently acquired Coin which will allow them to add payment technology to their devices.
While Apple Watch uptake continues to fall short of early forecasts, Apple already ranks among the largest watchmakers in the world in revenue terms, behind giants Swatch and Rolex, and ahead of Fossil, Citizen, Casio, Richemont, LVMH and other well-known heavyweights in watch making. This serves as a stark reminder of Apple’s global reach and pull and how smartphones have redefined market success, in terms of scale and rate of adoption.
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Wearables, like this smart-watch will sustain high growth rates as they are integrated with digital signage and beacon technologies.
Within the health and fitness category, activity trackers continue to be the standout performer, with volumes growing 18% in the quarter, to reach 10.7 million units. Sports watches with GPS and heart-rate monitoring (using chest-straps) grew 11%. Fitbit and Xiaomi commanded more than 70% share of activity tracker volumes while Garmin, Polar and Suunto remained the most popular brands in sports watches, used by fitness enthusiasts and endurance athletes. Unit growth for activity trackers has come at the expense of tumbling prices and ultimately rapid feature commoditisation – average prices for the category fell 40% in 2015, versus 2014.
With falling prices and value migrating to connected watches, overall spend on health and fitness wearables grew only 2% in 2015, and are expected to witness similar underwhelming growth this year, despite unit and penetration growth. As a result, vendors are focusing efforts on additional revenue streams such as accessories (bands, etc.), in-app engagement, emerging markets (where penetration is almost zero) and repositioning in to watches and jewellery.
A number of brands from the world of tech and fashion are manoeuvring for position with partnerships and acquisitions – Nokia buying French wearable-health Withings, Fossil acquired Misfit, and Fitbit recently acquired Coin which will allow them to add payment technology to their devices.
While Apple Watch uptake continues to fall short of early forecasts, Apple already ranks among the largest watchmakers in the world in revenue terms, behind giants Swatch and Rolex, and ahead of Fossil, Citizen, Casio, Richemont, LVMH and other well-known heavyweights in watch making. This serves as a stark reminder of Apple’s global reach and pull and how smartphones have redefined market success, in terms of scale and rate of adoption.

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