Market Overview

Key Smartwatch Trends Every Apple Investor Should Know

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In a new report, analysts at JP Morgan took a look at the smartwatch industry, particularly supply chain names.

A lot has changed in the space in recent months, and the introduction of Apple Inc. (NASDAQ: AAPL)'s new watch will likely completely transform the industry.

Failure To Launch

To this point, smartwatches in the pre-Apple Watch era have seen very limited success.

Analysts point to poor battery life, a lackluster app base and limited functionality as three reasons why consumers haven't warmed up to the current set of smartwatches in a meaningful way.

Analysts believe the newest wave of watches, including the Apple Watch, addresses many of these issues.

Growth Explosion Imminent

Analysts forecast a 40 percent compound annual growth rate (CAGR) in the smartwatch space through 2020. They believe that the global smartwatch market will become a $40 billion industry by that time and watch makers will be shipping more than 180 million watches annually.

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Analysts also project that high-end watches will account for more than 65 percent of the market, suggesting that Apple Watch "will likely dominate the smartwatch market for a while."

Competition With Traditional Watch Makers?

Analysts see little direct competition between smartwatch makers and traditional watch makers.

"We believe smartwatches are inherently CE devices and watchmakers focus more on a blend between style, technology and practical usage since people using conventional wristwatches would find many smartwatch features such as limited battery life [and] notification alerts as unnecessary," analysts explain.

Apple Watch And Apple Watch II (2016) Supply Names

The report contains a breakdown of suppliers for the Apple Watch and anticipated suppliers for the second generation Apple Watch expected out in 2016. Included below is JP Morgan's table of Apple Watch suppliers.


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