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Apple Watch Success Needed for a Smartwatch Mega Boom, New IHS Report Says

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IHS forecasts smartwatch market to grow from 3.6 million shipments in 2014 to 101 million shipments in 2020

LONDON--(BUSINESS WIRE)--The smartwatch market will grow from 3.6 million unit shipments in 2014, to 101 million shipments in 2020 according to a new report released today by IHS Inc. (NYSE: IHS), the leading global source of critical information and insight.

“Apple Watch success will drive the overall smartwatch market,” said Antonios Maroulis, analyst at IHS Technology. “The smartwatch will become a key accessory device offered by most leading smartphone manufacturers seeking to dominate this new profitable market. We forecast the ratio of smartwatch shipments to smartphone shipments will increase from 1:500 to 1:20 between 2014 and 2020.”

Apple’s entry into the smartwatch market will benefit all smartwatch suppliers as Apple’s marketing raises consumer awareness of the category and explains the benefits clearly.

The Apple Watch will leave an enormous addressable market untapped because the Apple Watch requires a modern iPhone and has a starting price of $349 USD. The two billion Android smartphone users and those Apple customers unwilling to spend so much on a smartwatch is a large target for Android smartwatch makers.

IHS Technology expects Apple Watch to succeed

In the IHS baseline smartwatch forecast, Apple’s 2015 Apple Watch shipments will hit 19 million units, or 56 percent of the total smartwatch market. Over time, IHS forecasts Apple’s share of the market will fall to 38 percent in 2020 as other smartwatch makers refine their products and successfully serve the vast Android smartphone market, which Apple chooses not to address.

Google’s Android Wear will ship 96 million units over the next five years, leveraging the vast Android smartphone installed base. Should Google add iPhone support, it will increase its addressable market still further, the IHS report says.

“Should Apple stumble with its foray into smartwatches, the smartwatch market will suffer similarly. Smartwatches could then follow the fate of Google Glass. Without Apple and its marketing strength, the smartwatch category needs greater marketing spend from other smartwatch makers to overcome damage to consumer perceptions,” forecasts Ian Fogg, senior director of Mobile & Telecoms at IHS. “Apple’s smartwatch competitors need the Apple Watch to succeed.”

Apps will drive smartwatch market

“Delivering a wide range of apps will be critical for smartwatch success,” Maroulis said. “Apple’s and Google’s success with existing smartphone application stores will give them an invaluable head start over challengers.”

Apple has an advantage in smartwatches because of the quality and range of apps for iOS devices such as the iPhone and the iPad. Similarly, Google has a head start because of the Google Play Android app store. Device makers may find tactical success in the short run with proprietary OS platforms such as Pebble or niche open platforms such as Tizen which Samsung supports. But in the long term, only standard platforms that are supported by many hardware makers will deliver sufficient scale to prove attractive to app makers.

Because of weak app ecosystems, IHS forecasts other smartwatch OS devices, excluding Apple and Android Wear, to amount to just 40 percent of smartwatch shipments in 2020.

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About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of insight, analytics and expertise in critical areas that shape today’s business landscape. Businesses and governments in more than 150 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs about 8,800 people in 32 countries around the world.

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. © 2015 IHS Inc. All rights reserved.

 
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