Wearable smart devices, commonly known as wearables, have gained a significant customer base globally over the past decade. Wearables such as smartwatches and fitness bands have witnessed large-scale adoption among consumers due to the rapid evolution of their lifestyles. With rising urbanisation, consumers are opting for aesthetically appealing and advanced wearable technology that can serve daily requirements and track real-time data.
Wearable technology offers the ability to monitor fitness levels, track one’s location via a global positioning system (GPS), and view mobile notifications more quickly and easily. Most importantly, most of these devices are hands-free and portable. Modern wearables available in the market range from fitness trackers, bluetooth headsets and smartwatches to head-mounted displays, clothing and jewellery. While these devices are currently used for entertainment and other daily tasks, there are increasing opportunities for growth and expansion in various sectors, including healthcare, households, textiles, construction and defence.
Market overview
According to data from the International Data Corporation’s (IDC) Worldwide Quarterly Wearable Device Tracker, the global wearables market experienced its first-ever decline during the first quarter of 2022, reporting a 3 per cent drop year on year, with unit shipments totalling 105.3 million units.
However, as per data from IDC’s India Monthly Wearable Device Tracker, the Indian wearables market remained resilient and shipped 13.9 million units in the first quarter of 2022, up 20.1 per cent year-on-year. The research firm attributed this growth to new launches, discounts across channels and aggressive marketing by brands.
The top player in the Indian market for wearables in the first quarter of 2022 was Imagine Marketing (BoAt), which held a 22.9 per cent market share, as per IDC data. Other leading players include Nexxbase (Noise), OnePlus, Fire – Boltt and Realme.
Growth drivers
Several factors are driving the growth of the wearables market. These include the increase in health awareness among consumers and the consequent rise in demand for fitness trackers and health-based wearables, coupled with increasing incomes and changing lifestyles. Health tracking wearables that monitor a variety of health-related parameters such as sleep quality, blood sugar levels, blood oxygen levels and calories burnt, witnessed enormous uptake during the Covid-19 pandemic. Furthermore, technological advancements and innovations are anticipated to create lucrative growth opportunities in the wearables market. Also, rising internet penetration is expected to bolster market growth.
Inflation-proof demand
According to a report by Counterpoint Research, the demand for handsets and appliances has plummeted due to high retail inflation, but wearables are witnessing high growth in shipments and demand tailwinds from the pandemic. The rise in shipments was primarily driven by the lower average selling prices (ASPs) of wearables compared to smartphones.
As per the report, ASPs of the overall category dropped 17.1 per cent year on year, primarily due to a stronger decline in the ASP of watches. Smartwatch ASPs fell from Rs 8,500 in 2020 to Rs 5,400 in 2021, and are expected to fall further as players focus on the Rs 2,000-3,000 segment in 2022. ASPs of wireless earbuds saw a year-on-year fall of 19 per cent in the first quarter of 2022. The drop in ASPs is mainly due to increased competition from new brands such as Dizo, Boult Audio, Fire-Boltt and the likes. Another factor is increased local manufacturing, with the government about to impose import duties on these products from 2023.
Further, the negligible influence of inflation on the demand for wearables is also because consumers tend to treat these goods as fashion lifestyle products, and often buy more than one product in a segment. New consumer use cases arising in the segment are further driving adoption.
Key trends
Smartwatches in vogue
Consumers are increasingly getting inclined to access the features of a smartphone in a watch, stimulating the growth of smartwatche adoption. In addition, technological improvements and modular aesthetics are the other growth drivers. A large base of smart band users is also gradually shifting towards smartwatches, as the ASP for smart bands has increased while that of smartwatches has fallen. As per IDC data, watches were the fastest growing category in the first quarter of 2022, with shipments of 3.7 million units and a record year-on-year growth of 173 per cent.
Smart glasses are getting smarter
Eyewear is picking up pace and getting smarter with continuous investments by tech companies in developing augmented reality (AR) and virtual reality (VR) beyond the usual areas of application. Moreover, surging demand from enterprises is bolstering the growth of this category. Smart glasses are penetrating into various industries, thanks to AR-enabled first-person imaging, facial recognition, enhanced turn-wise directions, health-sensing and more.
Smart clothing to gain traction
According to a World Economic Forum survey, 92.1 per cent of corporate leaders are of the opinion that 10 per cent of people will wear garments connected to the internet by 2025. The smart clothing market is currently in its infancy, with a few products commercially available, such as NadiX yoga leggings, Sensoria socks and Ambiotex smart shirts. However, the nascent demand in the mass market for fitness-related and sensor-embedded smart clothing is reflected by the gradually growing popularity of these products.
Skin patches catching up
With improved digital capabilities, skin patches have been developed to perform complex functions while being lightweight and flexible. This is made possible through the use of nanomaterials, flexible electronic technologies and sensors in the manufacturing of these wearables. According to GlobalData, miniaturisation and reduced costs will lead to a surge in wearable sensors in healthcare.
5G and wearables
According to GlobalData, 5G is a potential game changer for wearables. The low latency and high reliability offered by 5G technology will enable wearable designers to reduce the focus on storage capacity and processing power. Additionally, with the roll-out of 5G, wearables will be able to send and receive huge volumes of data and provide users with vastly greater amounts of digital information. However, making wearable devices 5G-ready will require higher technical standards and better product designs, while the potential demand for such devices remains largely indeterminate.
A bridge to the metaverse
The metaverse has recently been a hot topic of conversation, with tech giants such as Meta (formerly Facebook), Intel, Nvidia and Microsoft staking major claims. Essentially, the metaverse can be understood as a whole virtual world existing parallel to material reality. Needless to say, wearable technology is a requirement to bridge the gap between the physical and virtual realms. This is made possible through ground-breaking technologies and devices such as VR headsets and AR gadgets. Virtual goggles and VR headsets are the most useful wearables for experiencing the metaverse or AR. One of the most popular wearables is Oculus Quest 2, released in 2020, with Meta focusing on the creation of their own virtual worlds with an emphasis on VR. A myriad of metaverse hardware and wearables are in the pipeline, with tech companies heavily investing in research and development (R&D) and innovation. The long-term aim is to create feature-rich and lightweight metaverse wearables that can be comfortably worn all day, switching between VR and AR while enabling immersive interaction between metaverse users.
Challenges and the way forward
Despite the popularity, there remain several concerns regarding wearables. These devices require efficient use of power, as battery space is limited. There are also security vulnerabilities and data privacy concerns, including physical theft of data, lack of encryption and the risk of being hacked. Other issues range from poor data accuracy and technical connectivity problems to safety concerns due to the radiation emitted by these devices in close proximity to vital organs of a user’s body.
Nonetheless, IDC predicts that the outlook for wearables will be strong during 2022, as brands will try to attract consumers in Tier 2 and Tier 3 cities. As per IDC, Q2 2022 will see healthy growth and attract new entrants to the market. The growth momentum will continue for the remainder of the year for the wearable device category, primarily driven by offers, sales and marketing during the Indian festive season in the second half of the year.
Rapid R&D efforts and ongoing advancements by players will facilitate the expansion of the wearables market. A shift from consumer wearables to enterprise necessities is also being witnessed. Although at a nascent stage, these factors will provide enormous potential for wearable technology to move forward.
Additionally, the production-linked incentive scheme for wearables announced by the government is expected to further push prices down and increase volumes, with key players launching “Made in India” products. S
