Why the smartwatch market grew in 2022 despite ’tough’ odds

For some consumers, normal watches just aren’t cutting it: Global smartwatch shipments grew 12% year over year in 2022, according to Counterpoint Research, as products on both the entry-level and premium price points saw increased demand.

Smartwatches with a wholesale price below $100 saw an increase in shipment share from 29% to 35% between 2021 and 2022, while premium options with a wholesale price above $400 more than doubled over the same time period, from 6% to 13%, a 129% increase year over year. And yet again, Apple led the pack in shipment share, increasing from 32.6% to 34.1% year over year.

Though smartwatch shipments grew overall in 2022, the market ended the year on a relatively weak note: Shipments declined 2% in Q4—the first drop in the market since the start of the pandemic in 2020.

Matthew Orf, research analyst at Counterpoint Research, told Tech Brew that broader macroeconomic factors like inflation, demand cycles, the war in Ukraine, and renewed fears of Covid shutdowns in China were some reasons for the pullback in demand.

“I think we’re still in a place where the smartwatch market is a growth market and is going to keep growing by a pretty strong degree overall,” Orf said. “I think what we’re seeing is a moment that is tough; it’s the growth and adoption being kind of set back to some degree by these macroeconomic forces.”

Orf said one of the primary reasons Samsung and other players haven’t been able to make a real dent Apple’s market share is largely due to Apple’s entrenched smartphone user base. As consumers buy into Apple’s smartphone ecosystem, they are less likely to abandon it when it comes to smartwatch purchases.

2022 showed that there is still room for growth for new players in the smartwatch mark

Players like Noise and Fire Boltt in India entered the top five sellers’ list, catapulting India 167% year over year, making it the biggest smartwatch market in the world in Q3 2022, though that growth slowed in the following quarter.

“I think a lot of these other players are seeing that, maybe you have to go for a slightly lower price point in some ways. That’s one thing that we’ve seen in the smartphone market,” Orf said. He added that players who are struggling to compete with Apple in their price range have dropped their own respective prices to win on cost.

On the other side of the market, Apple’s $799 Apple Watch Ultra premium model opened up a growth path for consumers looking for improved features in their smartwatch. Orf said consumers interested in premium models are generally not first-time buyers and are looking for more advanced features in their next watch.

“I think what it is is consumers who have had a smartwatch before and who really understand the value that they do have on offer. Now that Apple is offering even more expensive options, I think they’re the ones who are going to be the most willing to say, ‘Okay, it’s probably worth spending a little bit more on my smartwatch to get the most out of it,’” Orf said.