Wearable Device Revenue Surges Due to Apple Watch

Fueled largely in part by the introduction of the Apple Watch, global revenue for the “wearables” market has grown significantly in the past year. According to a recent report by Futuresource Consulting, wearables revenue grew 133% , totaling almost $6 billion between the first quarter of 2015 and the first quarter of 2016.

The surge in revenue comes despite the fact that prices for activity trackers has dropped in the past several years – the report states that “average prices for the category fell 40% in 2015, versus 2014.” The growth of smartwatches, namely the Apple Watch, however, more than made up for the drop in activity tracker prices. In fact, the average price of smartwatch devices grew 50% year-over-year, up to $218.

Possibly due to the drop in prices, sales of activity trackers grew 18% in the first quarter of 2016, reaching 10.7 million units. Sports watches with GPS and heart rate monitoring also grew 11%. However, with the value of wearables tending to head more towards the smartwatch side of things, overall spending on specialized health & fitness wearables only grew 2% in 2015.

Futuresource predicts that the market for such devices will see “similar underwhelming growth this year, despite unit and penetration growth.” Many vendors are now focusing on accessories, apps, emerging markets, and targeting watches and jewelry to make up for slow revenue growth. A number of recent partnerships and acquisitions shows proof of this – Nokia recently bought connected health device vendor Withings, Fossil bought activity tracker manufacturer Misfit, and Fitbit recently bought Coin, allowing the company to add payment technology to their activity tracking devices.

With the introduction of the Apple Watch, however, Apple already ranks among the largest watchmakers globally, in terms of revenue. Although adoption of the Apple Watch has fallen a bit short of early forecasts, Apple already pulls in more revenue from the wearable than popular watch brands such as Fossil, Citizen, Casio, and a host of others.

Apple has never released sales figures for the Apple Watch, so these numbers are based partially on market data, and partially on speculation. Apple has publicly stated, however, that unit sales of the Apple Watch surpassed iPhone sales during its first year of availability. Adoption of the Apple Watch is expected to increase with the second generation of the device, to be announced this coming fall alongside the iPhone 7.