Enterprise demand drives growth in AR devices

End-user spending on wearables to hit $42bn next year, according to Gartner

Shipments of augmented reality (AR) head-mounted displays (HMD) are being fuelled by their popularity among enterprise customers, according to Gartner.

The analyst has forecast that shipments of wearable devices will hit 225 million in 2019, an increase of 26 per cent.

Shipments of HMDs will see a 22 per cent growth next year from 2018's figure of 28 million. This growth is expected to continue through to 2022, when shipment figures will reach 80 million.

The AR devices are used by enterprise organisations as hands-free tools for improving business processes and training.

Consumer use of HMDs has not lived up to prior expectations due to a number of factors, including cost, availability and design.

However, Gartner predicts that the mismatch between end-user expectations and current technology will change.

Alan Antin, senior director at Gartner, said that price will influence shipment figures for HMDs.

"Contrary to what we see in other segments, the average selling price (ASP) for HMDs will increase by 19.2 per cent until 2022, as better content demands better technology," he said.

Smartwatch domination

End-user spending on wearables is expected to reach $42bn (£32.8bn) in 2019, of which $16.2bn will be spent on smartwatches.

Next year smartwatches will be the top segment of all wearable device form factors, with 74 million units predicted to be shipped.

"At the moment, the smartwatch market is bolstered by the relatively stable and higher ASP of the Apple Watch," said Antin.

"But the overall ASP of smartwatches is expected to slowly decline from $221.99 in 2018 to $210 in 2022, due to lower-priced competitors and as higher volumes lead to reductions in manufacturing and component costs, while strong brands such as Apple and traditional watch brands try to keep pricing stable.

"Traditional watch brands such as Fossil and Casio will gain market share by offering more style and choice in their portfolio than the technology brands.

"We think that fashion and traditional watch brands are likely to account for up to 20 per cent of unit shipments by 2022."

However, ear-worn devices are predicted to upset this smartwatch dominance, as Gartner expects them to become the top wearables segment by 2022, with 158 milion units shipped.

The analyst said that ear-worn devices will account for more than 30 per cent of all shipped wearables, as their capabilities expand beyond communication and entertainment.

The next generation of these devices will be used for a multitude of tasks such as handling queries and hands-free directions, using a virtual personal assistant. They are also expected to take over many tasks currently undertaken by smartphones today.

Table 1: Forecast for Shipments of Wearable Devices Worldwide 2017-2019 and 2022 (Millions of Units)

Source: Gartner (November 2018)