In brief: The combined market value of three emerging tech categories is expected to exceed half a trillion dollars in less than five years. International Data Corporation (IDC) said the total value of wearables, smart home devices and augmented / virtual reality headsets is forecasted to reach $369.6 billion by the end of this year and $524.9 billion by the end of 2025.
IDC noted that each product category has matured beyond early adopter status over the past decade and into the mass market. What’s more, all are expected to benefit from a larger selection of devices, lower price points and improved user experiences in the near term.
IDC experts weighted in with commentary on each category.
Ramon T. Llamas, research director for the firm’s wearables team, said when wearables first arrived on the scene, many (myself included) wondered if they would be more than a passing fad. “Years later, wearables have earned a spot in consumers' minds as well on as their bodies, performing a number of functions ranging from health and fitness to communications to multimedia consumption,” Llamas added.
The continued popularity of earwear and smartwatches will be key to this category’s extended success, led by strong user demand, constant replacement cycles and in the case of smartwatches, new actionable insights.
Adam Wright, a senior research analyst with IDC's smart home and office devices team, noted that the underlying driving force behind the smart home devices category is services. He believes that as device margins shrink, the role of such products will largely be relegated to vehicles for delivering services.
The promise of enhanced entertainment, convenience, safety and security are paramount in the smart home sector, but concerns about privacy and security could hinder the category’s outlook, as will upfront and ongoing costs associated with devices and services.
In the AR / VR department, we’re seeing strong growth from both consumer and commercial buyers. Tom Mainelli, group VP for IDC's AR and VR team, said they anticipate both categories of devices to grow as new use cases present themselves and more major tech companies enter the space.
IDC believes this category has the potential for the fastest value growth in the coming years. In particular, IDC said it will be interesting to see how the experience evolves from consuming and interacting with content to connecting with other devices and having seamless experiences at home and work.