Smartwatch revenues rose 51% in the year ending last November, according to The NPD Group. The firm’s Smartwatch Total Market Report, which is new, said that unit sales rose 61% and the value of the category has reached almost $5 billion.
“Over the last 18 months, smartwatch sales gained strong momentum, proving the naysayers, who didn’t think the category could achieve mainstream acceptance, had potentially judged too soon,” Weston Henderek, an industry analyst for NPD Connected Intelligence, said in a press release. “The ability to be truly connected via built-in LTE without the need to have a smartphone nearby proved to be a tipping point for consumers, as they now recognize the value in being able to complete a wide range of tasks on the device including receiving notifications, messaging, accessing smart home controls, and more.”
It’s a top-heavy market with three companies –Apple, Samsung and Fitbit—controlling 88% of the market. This may change, however. Traditional watchmakers such as Fossil and Garmin, which is in the fitness market, are aiming to increase their market share.
There may be room for growth. NPD says that 16% of adults in the U.S. own a smartwatch, a 4% increase compared to December 2017. The 18- to-34-year-old age group leads with 23% penetration. Older segments are expected to grow in penetration as newer devices are introduced. NPD points specifically to the Apple Watch Series 4. There also is a secondary driver: 15% of smartwatch owners use the devices to control home automation devices.
Smartwatches got a lot of attention from analysts in 2017. In August, IDC reported that the second quarter of 2017 sales increased by 60.9% over the preceding quarter. During the same month, NPD Group said that smartwatch penetration would grow quickly over the next few years. It said that almost 9% of U.S. consumers more than 18 years of age owned a device and that represented an increase of 1.5% over a six month period. In October, Parks Associates said that smartwatch adoption had reached 14% among U.S. broadband households.