The firm expects that 310.4 million wearable devices will be sold worldwide in 2017 - an increase of 16.7 percent from 2016 – generating revenue of $30.5 billion. Smartwatches are expected to account for $9.3 billion of that revenue, with sales totaling 41.5 million units.
Apart from Bluetooth headsets, smartwatches are on pace to account for the highest unit sales of all wearable device form factors from 2019 to 2021, says the report. By 2021, they are predicted to total nearly 81 million units and represent about 16 percent of total wearable device sales.
"Smartwatches are on pace to achieve the greatest revenue potential among all wearables through 2021, reaching $17.4 billion," says Angela McIntyre, research director at Gartner. "Revenue from smartwatches is bolstered by relatively stable average selling prices (ASPs) of the Apple Watch. The overall ASP of the smartwatch category will drop from $223.25 in 2017 to $214.99 in 2021 as higher volumes lead to slight reductions in manufacturing and component costs, but strong brands such as Apple and Fossil will keep pricing consistent with price bands of traditional watches."
Two smartwatch sub-categories that are expected to perform well are kids' smartwatches and traditional watch brands. Kids' smartwatches – which are targeted at parents of two to 13 year-old children as a gateway to smartphones – are predicted to account for 30 percent of smartwatch unit shipments in 2021.