Rumors of the death of digital wearables are greatly exagerated. The wearables industry is still a frothy, exciting, and dynamic phenomenon, with fast-paced change, fierce competition, and innovation that continues to receive a lot of attention and funding from venture capital sources. A new report from Tractica provides “Wearable Device Market Forecasts.” The punchline is that by 2022, the worldwide market is expect to grow to 430 million units (up from 117 million in 2016) worth more than $73.3 billion (up from $16 billion for 2016). That works out to a compound annual growth rate (CAGR) of 24% for unit shipments. For revenues, the CAGR is more than 29%, which most economists would agree is pretty far from the deathbed.
Tractica breaks down the growth by different segments. Fitness trackers accounted for 80% of the units in 2016, but are forecast to fall to only 50% by 2022 (though half of 430 million units is still a big number). A lot of the growth will come from segments that are just getting started. Body sensors (including wearable patches) will become the third largest wearable segment as healthcare comes to rely more and more on these devices. “Smart headphones” that include hearing devices to assist with impaired hearing will grow from 833,000 units in 2016 to 13.7 million in 2022: nearly a 1,300% increase. Smart glasses for augmented reality (AR) will also take off in this period, enjoying a 131% CAGR rate; this means the segment will more than double every year.
One of the key points in the Tractica report underscores a point that we’ve been making here at Health Tech Insider for the past few years; the market is going to shift away from the individual exercise enthusiast. According to Tractica’s analysts, “Wearable device companies that pivot beyond fitness and activity tracking, toward preventing and managing chronic health conditions like diabetes and heart problems will succeed in the long run.” These health-related applications will result in the devices being sold in shipping container quantities at a time to large organizations for their employees and clients, rather than the current ones-and-twos to individual consumers. And while it will be difficult for any specific company to survive in this exploding industry, the clear message is that there will be winners and the stakes are high.