Wearables will drive growth as CE market slows

Wearable technology looks set to be a key driver of growth as the consumer electronics market hits a slowdown, experts predict.

The consumer electronics market saw trade fall 1.3 per cent to $676 billion (£508.9bn) in 2015, according to the latest report by researcher Futuresource Consulting.

Despite this, the wearables sector is predicted to grow by 50 per cent in value this year, and by an average of 22 per cent in the five years to 2020.

Said Simon Bryant, associate director consumer electronics of Futuresource Consulting: “The overall CE market growth has dried up as the smartphone boom has flattened, as convergence takes its toll and competition squeezes prices in the mature product sectors. However, on a more positive note, the wearables sector is looking extremely hot and is predicted to grow by 50 per cent in value this year and by an average of 22 per cent in the five years to 2020.”

Futuresource also expects the wireless speaker and headphone markets to grow, driven by the adoption of mobile music and streaming services.

Global CE trade growth is forecast at 1.2 per cent to 2020, however this could be impacted by changes in the global economy. Recent data revealed that emerging markets, which have driven growth in recent years, saw a slowdown in 2015.

Futuresource also advised that Brexit could be an “additional negative factor” in economic growth and CE demand.

It believes that the battle for growth will now shift to market share and price competition.

Jack Wetherill, senior market analyst for home electronics at Futuresource, added: “We will continue to see a changing landscape of market exits, mergers and acquisitions. In 2016, we’ve seen Microsoft exit the phone business and China’s Hisense take over Sharp America – highlighting how a market dominance strategy is seen to be the safest bet. On the other hand, growth segments like wearables will be won by established brands that are able to innovate, either internally or through acquisition, such as the Fossil Fitbit and Nokia Withings deals.”

However, Futuresource predicted that barriers to entry would continue to fall, allowing new entrants to gain market share using system on a chip (SoC) technology and contract manufacturers in China.