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Smart watches on the rise amid slowdown in mobile space

Posted: 27 Apr 2015     Print Version  Bookmark and Share

Keywords:The Linley Group  mobile market  smart watch  smartphone  tablet 

The fast pace of growth the mobile market has enjoyed for quite a number of years has now begun to lose speed. Over the next five years, both smartphones and tablets will slump to single-digit growth levels but smart watches could rise to annual sales of 300 to 400 million units, predicted analyst Linley Gwennap.

Forecasts that Apple could sell as many as 40 million of its watches in their first year are optimistic, nevertheless, "we expect a big jump," Gwennap said.

"In a year or so there will be a lot of knock-off products that look like the Apple Watch but sell for more like 50 bucks," he said, estimating by 2019 the 17 per cent of smartphone buyers purchasing high-end products will also get smart watches.

The devices need more integrated silicon to get down to sub-$100 prices consumers like, probably driving adoption of Cortex-M processors, he said. Gwennap speculated the Apple Watch uses an ARM Cortex-A CPU and an OpenGL GPU co-developed with a third party.

Smartwatch sales

Smart watch sales will rise to level of high-end smartphones, predicted Gwennap.

Meanwhile smartphones will slow to compound annual growth through 2019 of 9.6 per cent when a whopping two billion units will ship annually. Tablets are hitting the brakes even harder growing at just 4.4 per cent during the period, he estimated.

"The big driver was converting feature phones users to smartphones, but that's pretty much over now, so vendors are trying to convert basic phone users and that's going well," he said.

Meanwhile LTE-based smartphones are on a fast ramp, representing 28 per cent of units and 55 per cent of revenues in 2015. LTE will be in half of all smartphones by 2018, hitting the crossover five years faster than 3G took over from 2G.

Overall smartphone growth will still be a respectable 16 per cent this year, down from 27 per cent last year, Gwennap predicted. Tablets are slumping to seven per cent growth this year, expected to nearly reach a peak in 2019 at about 320 million units, down from estimates a few years ago of as many as 600 million tablets a year.

"The growth is at the low end with white-box tablets as the market matures," he said, noting Apple iPad shipments declined last year and Samsung's sales were weak.

Windows tablets are one small bright spot in the mix, growing to about 27 million units or 8 per cent of the market in 2019. "They are still pretty expensive, but are being used in the enterprise," Gwennap said.

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