A Google Branded Smartwatch Could Bring In About $4 Billion To Google’s Top Line By 2023

by Trefis Team
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In early November, Google (NASDAQ: GOOG) announced plans to acquire fitness tracking pioneer Fitbit for about $2.1 billion, in a move that signals the Internet behemoth’s increasing interest in the fast-growing wearables market. While the company already has some exposure to the smartwatch space, providing the Wear OS to smartwatch vendors such as Fossil, these products haven’t really gained much traction due to weak performance and the lack of compelling designs. We believe that Google could leverage Fitbit’s experience in the wearables space and the strength of its Android platform to launch its own smartwatch, on the lines of what it did in the smartphone market with the Pixel devices. We believe that such a device could be positioned above its Fitbit offerings. Based on our analysis, we estimate that Google could add as much as $4 billion to its revenues by 2023 if it is able to launch a compelling wearable device. This translates into under 3% of the company’s FY’18 revenues of $137 billion. In this analysis, we provide an overview of the wearables market and take a look at the potential revenues that Google could garner from the device.

View our interactive dashboard analysis on What’s The Revenue Potential Of A Google Branded Smartwatch?

An Overview Of The Wearables Market

  • Apple leads the wearables market with about 46.2 million shipments in 2018, followed by Xiaomi with 23 million, Fitbit with 14 million and Huawei with 16.4 million. (Data for 2017 onward also includes smart earphones. Historical data source: IDC)
  • Apple’s Wearable ASP is higher compared to peers, considering the higher price points on the Apple Watch ($200 to $1,000+). Xiaomi, on the other hand, has the lower ASP, given its focus on low-end fitness trackers.
  • We estimate that Apple’s Wearables Revenues stood at about $13 billion in 2018, followed by Fitbit and Huawei with about $1.5 billion and $0.8 billion, respectively.

For more details on the wearables market and how Google’s rival Apple is faring, view our interactive dashboard analysis on the Revenue Potential Of A Google Branded Smartwatch.

Estimating Google’s Smartwatch Shipments

  • We estimate that the global wearables market will grow from about 292 million units in 2021 to over 375 million by 2023.
  • We estimate that a Google-branded smartwatch could garner about a 1% share of the global wearables market by 2021, with the number rising to 4% by 2023.
  • This would translate into shipments of 3 million in 2021 growing to 15 million in 2023.
  • If we assume an average selling price of about $250 for the smartwatch, slightly ahead of the starting price of $200 for the legacy Apple Watch Series 3, but well below the $400 price of the Series 5, this would translate into revenues of over $3.7 billion by 2023.

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