New findings from the Telsyte Australian Smartphone & Wearable Devices Market Study 2016-2020 shows smartwatch sales grew by 89 per cent in H1 2016 compared to H1 2015, and now make up one third of the smart wearable device category. Overall, more than 1 million smart wearable devices were sold during the same period.

Apple Watch is the leading smartwatch brand with greater than 50 per cent market share followed by Samsung Gear and Fitbit Blaze.

“As smartphone replacement cycles have lengthened, consumers are turning to other gadgets and smartwatches have started to capture the imagination,” Telsyte Managing Director, Foad Fadaghi says.

“We might be seeing the beginning of a substitution effect where consumers are choosing a smartwatch over a new smartphone,” Fadaghi says.

Telsyte estimates that one in three smart wearables sold in the first half of 2016 were smartwatches compared to less than a quarter in 2015.

A number of factors are driving the smartwatch market growth according to Telsyte, including:

Australians focusing on health and fitness, with many upgrading to smartwatches from smart fitness bands such as those produced by Fitbit and Garmin. Telsyte research shows that 47 per cent of smart wearable users exercise a minimum equivalent of 30 minutes walking per day compared to 30 per cent for the general public.
Price reductions and greater availability through carrier channels, including bundles and repayment plans that make buying a smartwatch easier and more affordable.
More stylish designs and options for watch faces and bands that have greater appeal to both genders.
Mobile contactless payments using a smartwatch (such as Android Pay, Samsung Pay and Apple Pay) can make the payment experience faster than with a card or smartphone.

“The killer apps for early adopters of smartwatches seem to be fitness apps and mobile payments,” Fadaghi says.

Telsyte forecasts 37 per cent of Australians will be wearing a smart wearable (both bands and smartwatches) by 2020, with a substantial increase in sales in 2017 and 2018 driven by the arrival of a second generation Apple Watch, continued price decreases and more uptake of mobile payments on Apple and Android compatible wearables. Telsyte estimates 14 per cent of Australians (all ages, approximately 3.5 million) currently wear a smart wearable device of some sort.

Apple expected to bounce back with iPhone 7

Australian smartphone sales in the first half of 2016 were flat (up only 3.8 per cent) according to Telsyte, with 3.8 million units sold compared to 3.7 million in the same period last year.

Android device sales accelerated with 62 per cent of unit sales in H1 2016 compared to 55 per cent in H1 2015. Both ends of the Android market grew with premium models such as the Samsung Galaxy S7 variants and the Huawei Nexus 6P attracting high-end buyers, while late adopters, or consumers that have typically retained their regular mobile phones for as long as possible, gravitating to lower end models.

In H1 2016, the market leaders (in order) were Samsung, Apple and Huawei, together totalling 79 per cent of all units sold. Despite the slowdown in Apple sales in H1 2016, Telsyte believes Apple sales will bounce back in H2 with the arrival of the iPhone 7, and expected price decreases on older Apple models (e.g. iPhone 6S).

Telsyte also forecasts the arrival of the iPhone 7 will unleash a wave of hand-me-down and second hand older model iPhones which might impact the sales of sub-premium Android models throughout the next 12 months.

Overall, Telsyte forecasts annual smartphone sales to remain similar to 2015, if Apple can impress consumers with its iPhone 7 and attract buyers to its major product refresh that typically happens every second year.

“Android had a good run in the first half of 2016, however trend and purchase intention data indicates Apple consumers are on the verge of an iPhone upgrade cycle,” Telsyte Senior Analyst, Alvin Lee, says.

For further information on the study or media enquiries contact:

Foad Fadaghi, Managing Director, Tel: +612 9235 5851, ffadaghi@telsyte.com.au or
Alvin Lee, Senior Analyst, Tel: +612 9235 5890, alee@telsyte.com.au

The Telsyte Australian Smartphone & Wearable Devices Market Study 2016-2020 is a comprehensive study which provides subscribers with:

Smartphone market sizing estimates, platform and vendor market shares and forecasts
Smart wrist-based wearables market sizing estimates, platform and vendor market shares and forecasts
End user trends across devices, usage, platforms and operators
Purchase intentions and acquisition channels
Device profiles and Telsyte analyst ratings of tested devices

Telsyte measures smart wearable devices in the Telsyte Australian Smartphone & Wearable Devices Market Study 2016-2020 as computing accessories worn on a user’s wrist typically paired and controlled via a smartphone. Examples includes products from Adidas, Apple, Asus, Fitbit, Garmin, Huawei, Jawbone, LG, Microsoft, Motorola, Nike, Pebble, Samsung, Sony, TomTom and others.

In preparing this study, Telsyte used:

An online survey of a representative sample of Australians 16+ years of age conducted with 1,097 respondents in July 2016. An additional 394 Australian respondents, 16 years of age and older were surveyed to specifically determine smartphone, smart wearables and tablet purchases made between January 1 2016 to June 30 2016
Interviews conducted with executives from service providers, network operators, manufacturers, retailers, financial analysts and channel partners.
Financial reports released by service providers and manufacturers.
On-going monitoring of local and global market and vendor trends.
Analyst reviews of leading smartphone and wearable devices.