Smartwatches are on pace to achieve the greatest revenue potential: Gartner

Research firm Gartner forecast that 310.4 million wearable devices will be sold worldwide in 2017, an increase of 16.7 percent from 2016, while sales of wearable devices will generate revenue of $30.5 billion in 2017.

Smartwatches are on pace to achieve the greatest revenue potential among all wearables through 2021, reaching $17.4 billion," said Angela McIntyre, research director at Gartner. Revenue from smart watches is bolstered by relatively stable average selling prices (ASPs) of 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," she added.

Gartner said that Apple will continue to have the greatest market share of any smartwatch provider. However, as more providers enter the market, Apple's market share will decrease from approximately a third in 2016 to a quarter in 2021.

"The announcement of a new Apple Watch expected in September may enable direct cellular connectivity for interacting with Siri, texting and transferring sensor data when the phone or Wi-Fi is not present. We expect other consumer electronics brands such as Asus, Huawei, LG, Samsung and Sony to sell only 15 percent of smart watches in 2021, because their brands do not have as strong an appeal as lifestyle brands for personal technologies," report further said.

Gartner also expects two sub-categories that Gartner expects to perform well are kids' smart watches and traditional watch brands, which will emerge as significant segments for smart watches. Gartner expects kids' smart watches to represent 30 percent of total smartwatch unit shipments in 2021. These devices are targeted at children in the two to the 13-year-old range before parents provide them with a smartphone.

The other subcategory, which will account for 25 percent of smartwatch units by 2021, is fashion and traditional watch brands. "Luxury and fashion watch brands will offer smart watches in an attempt to attract younger customers," said Ms. McIntyre. A final sub-category is represented by the startup and while-label brands (e.g., Archos, Cogito, Compal, Martian, Omate or Quanta), which will account for 5 percent of smartwatch unit sales in 2021.