RESEARCH REPORT

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EXECUTIVE SUMMARY
Smart Watches
Apple Watch, WatchKit, Android Wear, Tizen,
WebOS, and Embedded OS: Global Market Analysis
and Forecasts for Smart Watch Devices, Operating
Systems, and Applications

Published 1Q 2015

ADITYA KAUL
Research Director

CLINT WHEELOCK
Managing Director
 Smart Watches

SECTION 1
EXECUTIVE SUMMARY

1.1 INTRODUCTION
The smart watch, as a wearable device category, has been around since 2012, when Pebble
launched its Kickstarter project. Since then, the market has evolved and grown with
Samsung, Sony, Motorola, LG, and a host of other companies launching their own products.
While the market has grown, there has been no truly compelling mass-market product from
both a hardware and software standpoint.

The Apple Watch, set for release in 2015, is possibly the first smart watch product of its kind
with both the hardware and software attributes to make it a mass-market consumer device.
Apple’s weight behind the smart watch product category should benefit the market from a
consumer education standpoint and set the bar for innovation, just as Apple did when it
launched the iPhone and the iPad. Apple’s big differentiator is the highly successful and
innovative app ecosystem it has created, which now has the chance to extend iOS apps into
a smart watch interface, offering unique experiences.

Tractica expects that this market will grow beyond just Apple, with a host of other watch
operating systems (OSes) competing for share, including Android, Android Wear, Tizen, and
WebOS. Another important category of emerging watch OSes will be the embedded OS
systems used in e-ink display watches like the Pebble, niche-use sports watches, and a
hybrid analog smart watch category that blends traditional watch craftsmanship and
mechanical features with smart connectivity, fitness, and wellness tracking.

Chart 1.1 Smart Watch Market Share by OS, World Markets: 2013-2020

100%

90%

80%

70%

60%
(%)

50%

40%

30%

20%

10%

0%
2013 2014 2015 2016 2017 2018 2019 2020

Apple WatchKit Android Wear Android Tizen WebOS Embedded OS

(Source: Tractica)

© 2015 Tractica LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Tractica LLC
and may not otherwise by accessed or used, without the express written permission of Tractica LLC

1
 Smart Watches

This Tractica report examines global market trends for smart watches and provides 7-year
market sizing and forecasts for smart watch device shipments and revenues during the 2013
to 2020 timeframe. The report focuses on the technology issues, market opportunities and
barriers for smart watches, and the relevant application markets, including consumer,
enterprise, industrial, healthcare, and sports. A separate analysis provides details on smart
watch OSes and the implications for watch app developers. Key industry players are
analyzed in depth, including assessments of their relative strengths and weaknesses. Market
forecasts are segmented by region, application market, and connectivity technology.

1.2 MARKET DRIVERS

The market for wearables has a number of drivers, with Apple’s decision to enter the market
being a major one. Apple brings a number of elements that will boost the market, including
its world-class product and design team, one of the most visible global brands with an
extensive footprint in retail stores, a large and creative app developer base, and the best-in-
class supply chain to scale the market beyond levels yet seen. Apple’s participation in this
market also sets the wheels in motion for a whole range of component manufacturers in
Asia, from memory chips to displays, all of which are revved and ready to kick into action.
Some of this was in evidence at the recently concluded 2015 International CES 2015 in Las
Vegas, with multiple smart watches on display in the Asian section of the show.

The smart watch as a companion device to the smartphone is a highly compelling proposition
and one that will be a key driver. The smart watch is essentially a good tag team partner for
the smartphone and should eventually help smartphone vendors differentiate their offerings
based on the level of integration and cross-platform interaction they can provide.

The wrist is a highly convenient and accessible piece of real estate on the body. From a user
interface/user experience (UI/UX) perspective, the wrist is a whiteboard waiting for new kinds
of interactions, which will enhance the smartphone user experience, not replace it. This is a
key reason why Tractica believes that the smart watch will see the most success as a
wearable.

The entry of the smart watch is well timed, as the innovation in hardware and software has
reached an optimal point for entry into a watch form factor. The massive success of the
smartphone market has allowed silicon vendors and component manufacturers to improve
manufacturing and production techniques, giving rise to smaller, but equally powerful
component technologies like touchscreen displays, microcontrollers (MCUs),
microprocessors (MPUs), memory, packaging, etc., all of which need to be just perfect to
create a smart watch. The industry is now at a turning point where some of the smartphone
hardware and software technology can be optimized for a wearable smart watch form factor.

App developers are looking for the next phase of growth and evolution of UI interactions.
While they continue to earn revenue from smartphones, from an intellectual and creative
challenge perspective, app developers are likely to have more satisfaction developing for
new platforms like the smart watch. Also, it has been 7 years since the birth of the
smartphone app market back in 2008 and there is a long tail of developers that still only
make a limited amount of money. The smart watch provides a brand new platform where
you could make a mark and start from the same base, rather than starting anew.

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 Smart Watches

1.3 MARKET BARRIERS

While there are a number of drivers for the smart watch market, there are still barriers that
could restrict its growth. For one, the current crop of smart watches and apps has not been
as compelling as one would expect. While the launch of Google’s OS Android Wear provided
a boost to the market, giving original equipment manufacturers (OEMs) a chance to build
products that can use specific software designed for a wearable use case, 12 months since
the launch, we have not seen any compelling applications. One conclusion could be that
developers are not yet convinced about the smart watch platform and whether it is something
they would like to spend time and effort on, away from the lucrative smartphone market.

Another issue that smart watches could face for some time to come is that of supporting true
contextual notifications. Android Wear is built on Google Now, which is a contextualization
engine, but in reality, Google Now still has a way to go before it truly gives valuable
information. Apple lacks a contextual technology like Google Now and it remains to be seen
how WatchKit will use contextual information around location, time, and calendar to produce
notifications. Until then, smart watches will suffer from issues like repeat notifications, which
are likely to put off users, rather than engage new ones.

Battery life is another issue that will impact smart watch growth. Most high-end smart
watches like the Apple Watch or the watches from Samsung, Motorola, and LG have battery
life of a day, at the most, which could deter new adopters. Another issue for smart watches
is convincing a whole generation of young people to wear a wristwatch at all. Many people
under the age of 25 have never used a watch, as the utility of checking time has shifted to
the smartphone. It might be challenging to convince these users about its utility and making
it an additional device that you cannot forget, just like your smartphone, wallet, or house
keys.

1.4 TECHNOLOGY ISSUES

Unlike smartphones, which have a largely uniform set of components that are needed to
produce the devices, the smart watch market is different. Smart watches vary from the high-
end, multi-function watches like the Apple Watch with high-end MPUs, to low-end, niche use
watches like the Pebble that use basic MCUs. There is no single hardware platform for smart
watches. Most of the prominent semiconductor providers for wearables, including
Qualcomm, Freescale, and Broadcom, are supporting the complete spectrum of solutions,
with ARM-based MCU cores playing a big role, especially for Android and Android Wear
smart watches. Texas Instruments and NXP provide their own MCU products for the
wearables market. In addition, new entrants like MediaTek are launching a system-on-a-chip
(SoC) product for smart watches and Apple is releasing its own S1 chip, which it calls a
system in a package (SIP) platform. The fragmented nature of the smart watch market
should give component vendors plenty on which to differentiate their solutions.

The smart watch is a unique platform, different from the smartphone, around which new
UI/UX interactions are likely to develop. For example, Apple has introduced the concept of
glances on WatchKit, where a short glance gives the user a basic level of information,
however, a longer engagement can bring up additional information on the screen. Apple has
also introduced a new gesture with pressure, wherein a finger used as a button press on its
watch screen will bring up new interactions. Voice control is another important UI/UX
mechanism already used in Android Wear and watches like the Martian Voice Command.
The other area to keep an eye on is holographic displays where the content leaps out of the
display as a 3D object, with which one could interact. Watches with their limited display real
estate could be an interesting intersection point for holographic displays.

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3
 Smart Watches

Although battery life is an issue that could impact smart watch market growth, it is one of the
most important focus areas for companies within this space. Technologies like wireless
inductive charging are improving constantly, although issues exist with embedding the
inductive coils into small wearable form factors like a watch. Although wireless charging
through wireless pads will improve, a recent technology called WattUp from Energous
Corporation received a lot of attention and awards at CES 2015. WattUp allows true wireless
charging for devices within a range of 30 feet. Wireless power is an area to watch out for as
a potential solution for smart watches and the larger wearable space in general.

1.5 STRATEGIC RECOMMENDATIONS FOR THE VALUE CHAIN

There is a high likelihood that, by 2016, Apple will become the largest watch company in the
world, surpassing Swatch, which has leading global market share with revenues of over $9
billion. This alone suggests that we are at a turning point for the watch market, with new
disruptive opportunities beckoning. Tractica still firmly believes that the traditional watch
market will continue to survive because there is a large customer base that still prefers to
own a watch that has a long history and skilled craftsmanship behind it.

The fact that Apple does not refer to its watch as a smart watch should provide ample clues
as to how Apple approaches this market and does not really see the watch replacing the
traditional watch market, but rather inventing a new one. This is something for the industry
to understand and assimilate into its DNA.

Companies in this space should build on their strengths, just like Apple is building on its own.
The best bet for a small company is to make a product with a specific niche usage, most
likely around sports, fitness, or wellbeing. A large company should figure how to position and
integrate the watch with other successful products like the smartphone, smart home, laptops,
or other consumer electronics.

While Tractica sees software and application platforms allowing companies like Apple to
address multiple niche applications or use cases, there is also an opportunity to build watch
hardware for niche verticals like sports, enterprise, or industrial, keeping the software fairly
basic and embedded. Both approaches are likely to see traction as the market grows, with
a long tail of applications emerging eventually.

1.6 MARKET FORECAST

The worldwide market for smart watches will see a boost in 2015 with the release of the
Apple Watch. This is expected to drive the market forward, with other watch brands growing
as well in the long term. Overall, Tractica forecasts that worldwide shipments of smart
watches will grow from 2.3 million in 2013 to 94.9 million in 2020, growing at a compound
annual growth rate (CAGR) of 71% between 2013 and 2020. Worldwide smart watch
revenues will grow from $489 million in 2013 to $26.5 billion in 2020, at a CAGR of 77%
between 2013 and 2020.

© 2015 Tractica LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Tractica LLC
and may not otherwise by accessed or used, without the express written permission of Tractica LLC

4
 Smart Watches

Chart 1.2 Smart Watch Shipments and Revenues, World Markets: 2013-2020

100,000 $30,000

90,000
$25,000
80,000 Revenues Shipments
70,000
$20,000
(Thousands)

60,000

($ Millions)
50,000 $15,000

40,000
$10,000
30,000

20,000
$5,000
10,000

0 $-
2013 2014 2015 2016 2017 2018 2019 2020

(Source: Tractica)

© 2015 Tractica LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Tractica LLC
and may not otherwise by accessed or used, without the express written permission of Tractica LLC

5
 Smart Watches

SECTION 8
TABLE OF CONTENTS
SECTION 1 ...................................................................................................................................................... 1 
Executive Summary .................................................................................................................................... 1 
1.1  Introduction.................................................................................................................................... 1 
1.2  Market Drivers ............................................................................................................................... 2 
1.3  Market Barriers .............................................................................................................................. 3 
1.4  Technology Issues ........................................................................................................................ 3 
1.5  Strategic Recommendations for the Value Chain ......................................................................... 4 
1.6  Market Forecast ............................................................................................................................ 4 
SECTION 2 ...................................................................................................................................................... 6 
Market Issues .............................................................................................................................................. 6 
2.1  Market Drivers ............................................................................................................................... 6 
2.2  Market Barriers .............................................................................................................................. 9 
2.3  Application Analysis .................................................................................................................... 10 
2.4  Pricing Analysis ........................................................................................................................... 12 
SECTION 3 .................................................................................................................................................... 13 
Technology Issues .................................................................................................................................... 13 
3.1  MPU Versus MCU Platforms....................................................................................................... 13 
3.2  UI/UX Considerations .................................................................................................................. 13 
3.3  Battery Life .................................................................................................................................. 14 
3.4  Connectivity Analysis .................................................................................................................. 15 
3.5  Smart Watch Operating Systems ................................................................................................ 16 
SECTION 4 .................................................................................................................................................... 19 
Key Industry Players................................................................................................................................. 19 
4.1  Apple ........................................................................................................................................... 19 
4.2  LG ................................................................................................................................................ 19 
4.3  Motorola ...................................................................................................................................... 20 
4.4  Samsung ..................................................................................................................................... 21 
4.5  Sony ............................................................................................................................................ 21 
4.6  Fitbit ............................................................................................................................................. 22 
4.7  Omate.......................................................................................................................................... 22 
4.8  Basis............................................................................................................................................ 23 
4.9  Garmin......................................................................................................................................... 23 
4.10  Meta Watch ................................................................................................................................. 23 
4.11  Withings....................................................................................................................................... 24 
4.12  Pebble ......................................................................................................................................... 25 
4.13  Other Smart Watch Companies .................................................................................................. 26 
SECTION 5 .................................................................................................................................................... 28 
Market Forecasts....................................................................................................................................... 28 
5.1  Definitions and Forecast Assumptions ........................................................................................ 28 
5.2  Shipments by Region .................................................................................................................. 29 
5.3  North America ............................................................................................................................. 32 
5.4  Europe ......................................................................................................................................... 34 
5.5  Asia Pacific .................................................................................................................................. 37 
5.6  Latin America .............................................................................................................................. 40 
5.7  Middle East & Africa .................................................................................................................... 42 
5.8  Conclusions and Recommendations .......................................................................................... 44

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and may not otherwise by accessed or used, without the express written permission of Tractica LLC

48
 Smart Watches

SECTION 6 .................................................................................................................................................... 45 

Company Directory ................................................................................................................................... 45 
SECTION 7 .................................................................................................................................................... 47 
Acronym and Abbreviation List ............................................................................................................... 47 
SECTION 8 .................................................................................................................................................... 48 
Table of Contents ...................................................................................................................................... 48 
SECTION 9 .................................................................................................................................................... 50 
Table of Charts and Figures..................................................................................................................... 50 
SECTION 10 .................................................................................................................................................. 51 
Scope of Study .......................................................................................................................................... 51 
Sources and Methodology ....................................................................................................................... 51 
Notes .......................................................................................................................................................... 52 

© 2015 Tractica LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Tractica LLC
and may not otherwise by accessed or used, without the express written permission of Tractica LLC

49
 Smart Watches

SECTION 9
TABLE OF CHARTS AND FIGURES
Chart 1.1  Smart Watch Market Share by OS, World Markets: 2013-2020 ............................................. 1 
Chart 1.2  Smart Watch Shipments and Revenues, World Markets: 2013-2020..................................... 5 
Chart 2.1  Smart Watch Shipments by Application Market, World Markets: 2013-2020 ....................... 10 
Chart 2.2  Smart Watch Device Revenue by Application Market, World Markets: 2013-2020 .............. 11 
Chart 2.3  Smart Watch Average Selling Price by Watch Type, World Markets: 2013-2020 ................ 12 
Chart 3.1  Smart Watch Shipments by Connectivity Technology, World Markets: 2013-2020.............. 16 
Chart 3.2  Smart Watch Shipments by OS, World Markets: 2013-2020 ................................................ 17 
Chart 5.1  Smart Watch Shipments by Region, World Markets: 2013-2020.......................................... 30 
Chart 5.2  Smart Watch Device Revenue by Region, World Markets: 2013-2020 ................................ 31 
Chart 5.3  Smart Watch Shipments by Application Market, North America: 2013-2020 ....................... 32 
Chart 5.4  Smart Watch Device Revenue by Application Market, North America: 2013-2020 .............. 33 
Chart 5.5  Smart Watch Shipments by Connectivity Technology, North America: 2013-2020 .............. 34 
Chart 5.6  Smart Watch Shipments by Application Market, Europe: 2013-2020 ................................... 35 
Chart 5.7  Smart Watch Device Revenue by Application Market, Europe: 2013-2020 ......................... 35 
Chart 5.8  Smart Watch Shipments by Connectivity Technology, Europe: 2013-2020 ......................... 36 
Chart 5.9  Smart Watch Shipments by Application Market, Asia Pacific: 2013-2020 ............................ 37 
Chart 5.10  Smart Watch Device Revenue by Application Market, Asia Pacific: 2013-2020 .................. 38 
Chart 5.11  Smart Watch Shipments by Connectivity Technology, Asia Pacific: 2013-2020 .................. 39 
Chart 5.12  Smart Watch Shipments by Application Market, Latin America: 2013-2020 ........................ 40 
Chart 5.13  Smart Watch Device Revenue by Application Market, Latin America: 2013-2020 ............... 41 
Chart 5.14  Smart Watch Shipments by Connectivity Technology, Latin America: 2013-2020 ............... 41 
Chart 5.15  Smart Watch Shipments by Application Market, Middle East & Africa: 2013-2020 .............. 42 
Chart 5.16  Smart Watch Device Revenue by Application Market, Middle East & Africa: 2013-2020.... 43 
Chart 5.17  Smart Watch Shipments by Connectivity Technology, Middle East & Africa: 2013-2020 ... 43 
Chart 11.1  Tractica Research Methodology............................................................................................ 52 

Figure 2.1  Apple Watch ............................................................................................................................ 7 

Figure 2.2  Kairos Smart Watch ................................................................................................................ 8 
Figure 3.1  Energous Wattup Wireless Charging Solution ...................................................................... 15 
Figure 4.1  Moto 360 Watch .................................................................................................................... 20 
Figure 4.2  Withings Activité Watch ......................................................................................................... 25 
Figure 4.3  Pebble Watch ........................................................................................................................ 26 

Table 4.1  Additional Industry Participants ............................................................................................. 26 

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50
 Smart Watches

SECTION 10
SCOPE OF STUDY
This Tractica report examines global market trends for smart watches and provides 7-year market sizing
and forecasts for smart watch device shipments and revenues during the period from 2013 through 2020.
The report examines the technology issues, market opportunities, and barriers for smart watches and the
relevant application markets including consumer, enterprise, industrial, healthcare, and sports. A separate
analysis is provided around smart watch operating systems and the implications for watch app developers.
Key industry players are analyzed in depth, including assessments of their relative strengths and
weaknesses. Market forecasts are segmented by world region, application market, and connectivity
technology.

SOURCES AND METHODOLOGY

Tractica is an independent market research firm that provides industry participants and stakeholders with
an objective, unbiased view of market dynamics and business opportunities within its coverage areas. The
firm’s industry analysts are dedicated to presenting clear and actionable analysis to support business
planning initiatives and go-to-market strategies, utilizing rigorous market research methodologies and
without regard for technology hype or special interests including Tractica’s own client relationships. Within
its market analysis, Tractica strives to offer conclusions and recommendations that reflect the most likely
path of industry development, even when those views may be contrarian.

The basis of Tractica’s analysis is primary research collected from a variety of sources including industry
interviews, vendor briefings, product demonstrations, and quantitative and qualitative market research
focused on consumer and business end-users. Industry analysts conduct interviews with representative
groups of executives, technology practitioners, sales and marketing professionals, industry association
personnel, government representatives, investors, consultants, and other industry stakeholders. Analysts
are diligent in pursuing interviews with representatives from every part of the value chain in an effort to gain
a comprehensive view of current market activity and future plans. Within the firm’s surveys and focus
groups, respondent samples are carefully selected to ensure that they provide the most accurate possible
view of demand dynamics within consumer and business markets, utilizing balanced and representative
samples where appropriate and careful screening and qualification criteria in cases where the research
topic requires a more targeted group of respondents.

Tractica’s primary research is supplemented by the review and analysis of all secondary information
available on the topic being studied, including company news and financial information, technology
specifications, product attributes, government and economic data, industry reports and databases from
third-party sources, case studies, and reference customers. As applicable, all secondary research sources
are appropriately cited within the firm’s publications.

All of Tractica’s research reports and other publications are carefully reviewed and scrutinized by the firm’s
senior management team in an effort to ensure that research methodology is sound, all information provided
is accurate, analyst assumptions are carefully documented, and conclusions are well-supported by facts.
Tractica is highly responsive to feedback from industry participants and, in the event errors in the firm’s
research are identified and verified, such errors are corrected promptly.

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51
 Smart Watches

Chart 10.1 Tractica Research Methodology

MARKET RESEARCH

SUPPLY SIDE DEMAND SIDE

PRIMARY Industry Vendor Product End-User End-User

RESEARCH Interviews Briefings Evaluations Surveys Focus Groups

SECONDARY Company News Technology & Government & Case Reference

RESEARCH & Financials Product Specs Economic Data Studies Customers

MARKET ANALYSIS

QUALITATIVE Company Business Competitive Technology Applications

ANALYSIS Analysis Models Landscape Assessment & Use Cases

QUANTITATIVE Market Market Market Market Share Scenario

ANALYSIS Sizing Segmentation Forecasts Analysis Analysis

(Source: Tractica)

NOTES
CAGR refers to compound annual growth rate, using the formula:

CAGR = (End Year Value ÷ Start Year Value)(1/steps) – 1.

CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are
given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given
as well.

Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments,
and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2015
U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.

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and may not otherwise by accessed or used, without the express written permission of Tractica LLC

52
 Smart Watches

Published 1Q 2015 

© 2015 Tractica LLC 

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Tel: +1.303.248.3000 
Email: [email protected] 
www.tractica.com 

This publication is provided by Tractica LLC (“Tractica”). This publication may be used only as expressly
permitted by license from Tractica and may not otherwise be reproduced, recorded, photocopied,
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this publication). If you do not have a license from Tractica covering this publication, please refrain from
accessing or using this publication. Please contact Tractica to obtain a license to this publication.

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and may not otherwise by accessed or used, without the express written permission of Tractica LLC

53