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Wearable Device Market Fragmentation will Increase

Worldwide shipments of wearable devices are expected to reach 101.9 million units by the end of 2016, representing 29 percent growth over 2015. Wearable devices have a forecast compound annual growth rate (CAGR) of 20.3 percent, culminating in 213.6 million units shipped in 2020, according to the latest market study by International Data Corporation (IDC).

"Unlike the smartphone, which consolidated multiple technologies into one device, the wearables market is a collection of disparate devices," said Jitesh Ubrani, senior analyst at IDC. "Watches and bands are popular, but the market will clearly benefit from the emergence of additional form factors, like clothing and eyewear, that will deliver new capabilities and experiences."

IDC believes that eyewear has a clear focus on the enterprise as it stands to complement or replace existing computing devices -- particularly for workers in the field or on the factory floor. Meanwhile, clothing will take aim at the consumer, offering the ability to capture new forms of descriptive and prescriptive data.

Two other factors driving the wearables market development forward are wireless communication connectivity and software applications.

According to the IDC assessment, the wearables market presents a strong opportunity for software developers. Applications increase the value and utility of a wearable, and users want to see more than just their health and fitness results. News, weather, sports, social media, and Internet of Things (IoT) applications will all have a place on a wearable device.


Wearable Product Category Highlights

Watch: Popularized by devices like the Apple Watch, Moto 360, and others, this category is expected to increase from 41 percent of total wearables shipments in 2016 to 52.1 percent in 2020.

Wrist Bands: Through their simplicity, fitness-focused wrist bands have dominated the market thus far. Driven by low cost vendors Xiaomi and giants like Fitbit, this category will remain influential and accessible.

Eyewear: Google's Android platform is projected to drive this category. Although it will produce less than 10 percent of wearable device shipments by 2020, it will account for more than 40 percent of the total revenue of the wearables market due to the high prices.

Clothing: Traditional fashion and fitness brands are quickly partnering up with tech companies to deliver smarter clothing, bringing some much needed attention to this nascent category. It stands to capture 7.3 percent of the market by 2020 as consumers and athletes integrate fashion-tech into their daily lives.

Others: Lesser known form factors like clip-on devices, hearables, helmets, and more will account for 6.1 percent in 2016 and 3.3 percent in 2020. While IDC does not expect an immense growth in this category, it will evolve as numerous vendors cater to niche audiences with creative new devices and use cases.

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