If you’re tuning into the tech-based conference SXSW this week, you’ll see a certain type of technology dominating the conversation there: wearable technology. Deb Hanamura, SXSW participant and Director of Marketing at Metia observed, “This is one of the first years where I’ve seen [the topic of] social media quiet down at SXSW… it’s being replaced by wearable technology, which is really what I think next year will be all about.”
So how big of a market is wearable technology becoming? According to recent research, the global wearable electronic device market is forecasted to grow from $3.7 billion in 2013 to $8.3 billion (18 percent CAGR) by 2018. By volume, the market will increase 30 percent CAGR from 35.7 million to 134 million units. Analysts believe that wearables will live up to the “hype,” and smart devices have the ability to become standalone devices rather than smartphone accessories.
Analysis of Patent Filings for Wearable Tech
Examining recently filed patents is another strong indicator of where the market is headed. Hanover Research reviewed patents filed with the U.S. Patent and Trademark Office (PTO) to discern emerging materials, technologies, and demand for electronic wearable devices. To gain a higher-level view of wearable electronic device trends, Hanover conducted a search for wearable electronic “smart” devices across four segments in patents filed during the past 10 years (January 2003 to present). Search results included 148 patents, spanning segments such as watches, glasses, cameras, and textiles.
Annual filing frequency is trending downward since 2008 when 34 patents were filed. No patents were filed in 2013, which may reflect administrative delays between patent application and filing. Watches have consistently maintained leading share throughout the 10 year period, collectively accounting for nearly 60 percent of cumulative filings.
U.S. Patents for Smart Devices by Segment (2003-2013)
What Companies Are Dominating IP Ownership?
Of the 148 patents, Hanover identified 82 filing companies responsible for 137 patents. The remaining 11 patents are attributable to unknown companies. The top five filing companies together comprise 30 percent of the dataset. With headquarters in Japan, Panasonic Corporation is the only non-U.S.-based company in the top five.
Top U.S. Patent Filing Companies for Wearable Tech, 2003-2013
What Should Sellers Anticipate?
The market is still in search for the first blockbuster product. Google Glass is top of mind when people visualize wearable technology, but the public is divided on how successful its launch will be due to aesthetic issues; research scientist Simson Garfinkel positions humorously: “for its wearable computer to be accepted, Google must convince people that the device isn’t creepy.”
In the meantime, smart watches are poised to become the segment leader because they are “less obtrusive.” In 2012, the consumer segment comprised nearly 90 percent of all wearable electronics. Currently, sales volume is concentrated in consumer devices used to track and transmit exercise performance. By 2018, analysts forecast that the infotainment segment will pass the fitness/wellness segment.
How Should Manufacturers and Suppliers React?
Accelerated production of wearable technology will create an uptick in demand for certain raw materials. According to Hanover Research’s analysis, among relevant U.S. patents filed from 2003 to 2013, metal was the top material for watches and textiles, while plastic and glass were cited most frequently in cameras and glasses, respectively. Plastic applications for watches included displays, chassis, housing, straps, antenna coverings, and stoppers. Plastic applications for glasses focused on frames.
Across 32 planned or currently available smart watches, top materials include silicone for bands, stainless steel for cases, metal for bodies, and glass for screens. Watch form continues to evolve, as manufacturers search for designs that resonate with consumers. While early smart watches follow traditional watch form (interface and straps), manufacturers may be moving toward a wrap-around form that coincides with flexible screen development.
How to Keep an Accurate Picture of Wearable Tech Market Growth
If your company is looking to enter the wearable technology market, systematic market evaluations will be critical in order to know if, when, and how to enter the market. Below, we outline just a few ways in which you can collect data and conduct market research.
- Off-the-shelf market reports
- U.S. government reports and country monitoring services
- U.S. Department of Commerce
- Business Monitor International
- Economist Intelligence Unit
- Industry and trade publications
- Data and inputs provided by market participants
- Earnings reports
- Patent Filings
- Industry surveys/interviews
- Top-down demand and market segmentation modeling
- Bottom-up market estimation
- Macroeconomic forecasting
- Value-chain mapping
- Technology adoption lifecycle and product penetration modeling
- Benchmarking and case studies
- Industry surveys and in-depth interviews
If you have any questions on how to conduct an effective market evaluation, whether it be in a market poised to grow like wearable tech, in a market overseas, or elsewhere, post your question in the comment box below or e-mail firstname.lastname@example.org, and a Hanover Research expert will guide you.