AI powered wearables will provide a much-needed impetus to the stagnant wearables segment this year. Categories such as AI powered hearables will be instrumental to drive major growth, with Apple again leading the way to catalyze this trend.

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February 23^th, 2017

The introduction of Artificial Intelligence (AI) in wearables like smartwatches and hearables will drive growth for the wearable segment in 2017. As per Counterpoint’s Wearable Research, AI powered wearables will grow 376% annually in 2017 to reach 60 million units.

Commenting on the analysis, Parv Sharma, Research Associate said “Wearables haven’t seen the expected momentum so far because they have struggled on the lines of a stronger human computer interaction (HCI) which can enable powerful experiences. However, the integration of Artificial Intelligence (AI) into the wearables will change how we interact with or use wearables. AI will not only enhance the user experience to drive higher usage of wearables but also will make wearables smarter and intelligent to help us achieve more.”

Counterpoint Analyst Karn Chauhan added “With AI integration in wearables, we are entering ‘wearable 2.0’ era. Major growth in the segment is driven by the hearable market which includes devices like Apple AirPods, Beats and other innovative products from lesser known brands like Bragi Dash.

Furthermore, the growth for this category will be driven by proliferation of Amazon’s Alexa into third party hardware from smartwatches such as Martian and hearables such as ONvocal. Henceforth, it is a natural path for other competitors to integrate their AI solutions across their own as well as third party wearables.”

Exhibit : Market Share of AI powered wearables by segment FY 2017 (E)

Market Summary

• Hearables will contribute to 50% of the AI powered wearables in 2017 and will be the fastest growing category with a growth of over 2500% annually.
• Smartwatches with AI will contribute to 42% of the market and will see AI being adopted by key players in the segment.
• In 2017, Apple will have 78% market share in AI based hearables.
• Activity trackers with AI will witness a growth of 545% in 2017 and will contribute to 4% of the total AI based wearable market.
• Other wearable devices like Head Mounted Displays (HMD), VR Headsets will also be integrated with AI in 2017 but will remain a niche market.

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