Shipments of Smartwatches: 65% Will Have Cellular Connectivity by 2020 [REPORT]

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A sign of relief for people who have invested in Smartwatch; Smartwatches would no longer be treated as an extension of a smartphone in the future. A recent report from Canalys estimates the shipments of smartwatches with cellular connectivity will reach 7.5 million units worldwide by the end of 2016. Interestingly, the global shipments of smartwatches are estimated to increase to 53.6 million units by the end of 2020, at a 63% CAGR (Compound Anual Growth Rate).

A number of firms, including LG with its LTE-enabled Watch Urbane 2nd Edition, Samsung with its Gear S2 classic 3G/4G and Apple, is rumoured to adopt this new cellular technology in its upcoming smartwatches. On the contrary, the claims made by Canalys appear to be overwhelming as, according to Statista, only 24.92 million units of smartwatch were shipped in 2015.

Shipments of Smartwatches 2016 – 2020: Cellular Are Here

The shipment estimation of 7.5 million smartwatches with cellular connectivity in 2016 appears quite hazy when we put it in perspective with the projected figure of total shipments of smartwatches by IDC. The research firm IDC estimates an overall shipment of smartwatches to reach 28.3 million units, of which Samsung’s Tizen OS will power 3.2 million devices. Considering smartwatches with cellular connectivity has just started debuting, it would be interesting to see how the smartwatches with cellular connectivity will capture 25% of the total smartwatch to be shipped during the whole year within the remaining five months.

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Deciphering the 2020 scenario, IDC also predicts that the smartwatch shipments are expected to reach whopping 82.5 million by the end of the year. On the other hand, according to Canalys, the shipments of smartwatches with cellular connectivity is estimated to reach 53.6 million units in 2020. Therefore, taking all the figures of 2020 into account and the companies increasing focus towards smartwatches with cellular connectivity and eSIM, it’s safe to believe that nearly 65% of the total smartwatches that are estimated to be shipped by 2020 would feature cellular connectivity.

eSIM is the Key

According to Danial Matte, an analyst at Canalys, smartwatches with eSIM capability would drive the future of smartwatch Industry as the technology will provide independence from smartphones. Thus, with huge usability potential, a number of watches with cellular connectivity would be manufactured in 2016 and coming years.

The shipment numbers are expected to rise phenomenally in 2017. Apart from incorporating cellular connectivity, the future smartwatches are expected to house state-of-the-art features like enhanced fitness trackers, better battery life, etc., which in turn would boost the shipment figures by multiple folds.

Riding on the back of its proprietary Tizen OS, Samsung is apparently much ahead than its competitors in the smartwatch category; its Samsung Gear S2 happens to be the first smartwatch in the world to feature programmable eSIM. Android Wear, however, is not far behind as most of the companies, likes of LG and Samsung, working on Android Wear will be introducing cellular connectivity feature in their upcoming smartwatches.

Smartwatch: A Promising Industry

The future belongs to the wearable industry as the market is estimated to be worth $28.7 billion by the end of 2016. And 40% of the revenue of the wearable industry would be coming from the smartwatch arm alone. The independence of smartwatches from smartphones after the introduction of eSIMs will help the industry to grow at much faster pace. Most of the smartwatches available in the market today have to be connected with Smartphone via Bluetooth or Wi-Fi. Thus making smartwatch no better than just an accessory for a smartphone. This, however, going to be changed soon.

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shipments of smartwatches 2016 - 2020

Apple, which enjoys the lion’s share of smartwatch industry, is also rumoured to be working on cellular technology on its upcoming smartwatch. Google has also incorporated the cellular connectivity in its Android Wear. Samsung and LG are also not leaving any stones unturned to capture a sizable share of the smartwatch market. Thus, smartwatch segment is going to witness an interesting scenario in the future.

The hurdles

But everything is not rosy in the smartwatch space; The major hurdle for the smartwatches is the pricing strategy. On an average, a smartwatch is tagged with $300, which is quite expensive. On the other hand, Fitness bands are more famous and much cheaper than smartwatches and costs around $100. Consequently, the adoption of fitness wearables is greater than smartwatches.

Even the top player in the Smartwatch industry is also facing challenges. Apple has always been criticised for the poor battery performance in their Apple Watches.

On the contrary, the battery of a majority of fitness wearables lasts for days, making it more attractive.

Apart from incorporating the cellular connectivity, the smartwatch manufacturers would also look to implement a number of next-generation features, like payment. The app ecosystem of smartwatches, however, has to be improved to assist the seamless usability of smartwatches and to make it a wannabe device.

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