Smart watch market to grow to 71.5mn shipments by 2021, led by Apple
According to new research from the International Data Corporation (IDC), the smart watch market is expected to more than double by 2021.
“Led primarily by the Apple Watch”, the IDC predicts that shipments will increase from 31.6mn units in 2017 to 71.5mn units in 2021, with a forecast compound annual growth rate (CAGR) of 22.7%.
The contributing factors of this will include a wider adoption of cellular connectivity and a technology transition to more sophisticated watches that will be able to run apps, play games and communicate.
With capabilities similar to that of a smart phone or tablet and a more fashionable appearance, the IDC predicts that smart watches will likely come to replace wearables such as the Fitbit.
“The move from wristbands to watches introduces additional revenue opportunities for vendors and distributors as average selling prices are expected to rise,” said Jitesh Ubrani, Senior Research Analyst for IDC Mobile Device Trackers.
“However, the struggle to move beyond health and fitness persists and convincing consumers to spend more for utility that may not be immediately obvious will be a challenge. This is where fashion-forward brands have a chance to shine as their customer base doesn't tend to prioritize.”
Within the report, the IDC also predicts that the overall wearable devices market will grow from 113.2mn shipments in 2017 to 222.3mn in 2021.
M&A activity key lever for future tech sector growth
Despite the continuing uncertainty of the pandemic, the tech sector has witnessed soaring dealmaking activity over the past year, rocketing in the second half of 2020, with the last quarter of 2020 a record one for M&A activity, and momentum continuing into 2021.
Dealmaking in tech sector soars in past year
And the latest figures bear this out with the number of technology M&A deals totalling US$208.44bn globally in Q1 2021, according to GlobalData. While the US holds top spot both in volume of deals (1034) and total value (US$140.61bn), Europe ranked next with 649 deals (US$44.49bn) with the UK continuing its reign as Europe’s biggest M&A market with 204 deals.
In particular, megadeals – those valued at US$5bn or more – soared in 2020 representing 59% of all global technology sector deal value in 2020, up from 47% in 2019, according to the latest edition of the EY Technology Global Capital Confidence Barometer.
This tech sector trend towards megadeals is backed up by EY’s CCB data, with 16% of tech sector respondents planning to pursue transformative deals valued at US$5bn or more in the near-term.
While technology deal activity “all but stopped at the beginning of 2020 after fluctuating between historic highs and lows, companies pivoted quickly and tech M&A exploded in the second half of the year”, says Barak Ravid, EY Global TMT Leader for Strategy and Transactions.
M&A activity level for tech sector growth
Looking ahead to the future, technology executives are optimistic, with nearly half (47%) expecting profitability to fully rebound this year, according to CCB data, compared to 23% across all sectors, and with more than half (51%) planning to pursue M&A in the next year in order to sustain growth.
According to Ravid, M&A activity is increasingly becoming a key lever for growth as businesses look to recover.
“To position themselves for future revenue growth, tech companies are now adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment and to gain market share through consolidation,” says Ravid.
However, with an increasingly competitive deal market and ongoing geopolitical tensions, the majority of tech execs expect to see more competition in the bidding process for assets over the next year, primarily from private capital.