The next tipping point in the wearable device or smart end market

According to a report released by Canalys Consulting, an internationally renowned research organization, due to the impact of poor economic conditions and seasonal sluggish demand, global smartphone shipments fell by 11% year-on-year in the first quarter of 2022.

For the future trend of the smartphone market, a report in the Wall Street Journal quoted Konaz consulting analysts as saying that smartphone suppliers must be "prepared to quickly respond to emerging opportunities and risks, while focusing on long-term development strategies."

While the smartphone market is weakening, with the continuous development of 5G, artificial intelligence and other technologies, driven by global applications and experiential consumption, the smart wearable device industry has developed rapidly, becoming the fastest growing high-tech field in the world. According to statistics, global smart wearable device shipments have increased from 0.29 billion units in 2014 to 534 million units in 2021, and are expected to reach 637 million units by 2024. Will the smart wearable device market become a latecomer to the smartphone market?

△ Now, there are more and more types of smart wearable devices, common smart watches, smart bracelets, smart glasses, ear-worn products and so on. In addition to more abundant types, smart wearable devices have more and more functions, in addition to the conventional viewing time, calls, electronic payments, but also added health monitoring, travel management and other functions, and these functions and applications of continuous innovation, open up a new consumer market. (Image courtesy of CNSPHOTO)

The smartphone market is saturated

In 1999, Motorola launched a mobile phone called Tiantuo A6188, which is the world's first touchscreen mobile phone, the world's first smartphone, and the originator of the fast-growing smartphone. The phone uses a 16MHz CPU, supports WAP 1.1 wireless Internet access, and adopts PPSM (Personal Portable Systems Manager, personal portable operating system).

Since then, Ericsson, Nokia, Sharp and other manufacturers have successively made efforts, but subject to objective conditions such as technology and market environment, the smartphone market has been showing a tepid state. This continued until 2007.

This year, smartphones were redefined on Apple products by Apple founder Steve Jobs. With the release of the iPhone, the entire mobile phone market has been completely subverted by the various unprecedented innovations it has brought. It not only set off a wave of touch screens, but also heralded that mobile phones have officially entered the era of intelligence.

To this day, the iPhone's first large-icon interface design, gravity sensing to change the screen orientation and a variety of integrated iPod multimedia applications can still find shadows on many Android phones.

As a result, the global smartphone market has entered a stage of rapid development.

By 2016, global smartphone shipments had reached an all-time high, with annual shipments reaching 1.47 billion units. However, in 2019, global smartphone shipments fell to 1.37 billion units. Global smartphone sales peaked at $483.3 billion in 2018 and fell back to $458.2 billion in 2019.

Entering 2020, due to the impact of the new crown pneumonia epidemic and market factors, the shipment performance of the global smartphone industry has become less optimistic, and there has been a more obvious decline. According to a report released by the International Data Corporation (IDC), global smartphone shipments in 2020 were 1.29 billion units, down 5.9% year-on-year. In 2021, Canalys consulted a report showing that the total annual shipment of smartphones worldwide was 1.35 billion units, an increase of 7% year-on-year, but still not reaching the level of 2019.

Who is the next tipping point for smart terminals

Today, the application scenarios of a smartphone are so rich that even Jobs himself will be surprised - on this small screen, it can bring together many functions such as banking, social networking, navigation, and games.

Still, CNN believes there is growing evidence that the era of smartphones is coming to an end.

In fact, as the pace of technological progress continues to slow, people change their phones less frequently, which has led to a slow decline in global phone sales since 2016. As a result, both technology developers and investors are looking for the next market tipping point.

The smart wearable device market is a tipping point where they have high hopes.

From 2020 onwards, the accumulation of market factors and the impact of the new crown pneumonia epidemic, VR (virtual reality) headsets have achieved rapid development, and the application prospects of AR (augmented reality) are also broad. Most of america's largest tech companies, including Apple, Google, Metascope, and Microsoft, are now developing or selling VR or AR headsets. While the smart wearables market is currently a niche (a niche space held by a small group of customers with similar interests or needs in larger segments), it will become very lively.

Nowadays, there are more and more types of smart wearable devices, common smart watches, smart bracelets, smart glasses, ear-worn products and so on. In addition to more abundant types, smart wearable devices have more and more functions, in addition to the conventional viewing time, calls, electronic payments, but also added health monitoring, travel management and other functions, and these functions and applications of continuous innovation, open up a new consumer market.

Can it replace smartphones

In the face of the market of smart wearables, which has broad prospects for development, the British "Economist" magazine believes that it is still necessary to maintain the necessary sobriety, especially the head-mounted devices that have been in the limelight in the past two years: any claim that the next large technology platform has been discovered should be treated with caution.

The British "Economist" magazine article believes that this is because there have been many examples of thunder and rain before. For example, tablets once claimed to be the rivals of smartphones, but Apple's iPhone sales are still 6 times that of the iPad; the smart home market, once regarded as having unlimited development prospects, has developed so far, Amazon's Alexa smart assistant is at best a jukebox with a timer function; in-vehicle technology, although it has proven to have practical value and investment potential, is still far from the vision of becoming the core of digital life. So it's not hard to imagine that headsets, which are currently used primarily in gaming, could be in a similar predicament.

However, since the outbreak of the new crown pneumonia epidemic in 2020, the VR and AR industries have also entered a stage of rapid growth. In 2020, the global virtual reality market size is about $13.7 billion, of which the VR market is $9.4 billion and the AR market is $4.2 billion. Some analysts believe that in the five years from 2020 to 2024, the average annual growth rate of the global virtual reality industry is about 54%, of which the growth rate of VR is about 45%, the growth rate of AR is about 66%, and the market share of both is expected to reach 36.5 billion US dollars in 2024.

In addition to VR and AR, consumers will gradually turn their attention to a number of new smart wearable devices, such as voice-activated smart headphones that support functions such as calling and reading text messages, and smart watches that integrate memo reminders, navigation and fitness functions. At the same time, some health smart wearable devices are also emerging, from blood glucose monitoring to sleep monitoring. In the United States, sales of smart wearables are already close to smartphones.

However, these small devices are more like accessories for mobile phones than replacements. But as computer applications shift from pockets to people's wrists and ears, more and more consumers' attention and consumption direction will gradually shift away from mobile phones. As VR and AR devices become lighter and cheaper, they could become the most powerful products in the smart wearables family.

However, people will not abandon smartphones anytime soon, just as people will not abandon their laptops 10 years ago. But as they use headsets more frequently, or more frequently with VR and AR devices, more and more people will use their phones as a complementary device to provide computing support for other devices.

Compile 丨 years double crossing

Editor 丨 Li Mo Nan

Cover image 丨CNSPHOTO