Ericsson (ERIC) Report Shows Huge Potential In Wearables

Communication technology and services giant Ericsson (ST:ERICAs) (NASDAQ:ERIC) has released a new ConsumerLab Report, which focuses on wearable technology and the Internet of Things (“IoT”), and its demand projections in the future. The findings of its survey offer interesting insights to the future of wearables.

Most Desired Wearables Functions

With the demographic of wearable owners having evolved over the past few years, it seems that users are now younger and less concerned about fitness and health. According to the study, about 6 in 10 smartphone users are looking for more functionality from wearables. Specifically, consumers are showing great interestin devices that are related to personal safety and security, such as personal locators and panic buttons.

Other most-desired wearables functions include smartwatches, identity authenticators and wearable water purifiers, according to the opinions given by 5,000 smartphone users surveyed across Brazil, China, South Korea, U.K. and the U.S. Among these consumers, about half use wearables.

Market Poised for Growth

It’s almost a given that the wearables market is poised for tremendous growth in the coming years. Smartphone users who also own wearables have doubled over the past year in the surveyed markets.

Per a report from Transparency Market Research, the global wearable technology market stood at $750.0 million in 2012 and is expected to reach $5.8 billion in 2018, at a CAGR of 40.8%.

Smartphones to Be Replaced?

Ercisson’s report offers a peek at the market’s potential beyond 2020. The report says that wearables will increasingly help consumers interact with physical things and objects, with 43% smartphone users believing that wearables might actually replace smartphones sometime in the future.

Wearables will gradually get smarter and more independent in terms of connectivity, and this might make the smartphone less significant. 38% of smartphone users believe it likely that most smartphone functions will be performed by wearables within just five years.

About one-third of the smartphone users expect to use at least five connected wearable devices by 2020.

Further, wearable technology will also help people connect to the IoT, and thus accelerate the convergence of the digital and human worlds.

About 60% of the users believe that ingestible pills and chips under the skin will be common in the coming five years. In addition to health monitoring, these might also be used to authenticate identity and transactions, unlock doors, and other such tasks.In fact, a quarter of smartwatch owners are already using their smartwatches to control other digital devices remotely.

However, users expect that the current market wearables will take another year or so to become mainstream.

Risks in Wearables

Also, all this wearable technology use gives rise to apprehension about safety and security of personal information and data. About 53% of users surveyed acknowledged that wearables are vulnerable to hacking, data breaches and viruses. Yet, 60% think that they have complete control of their data.

To conclude, anything seems possible for this new technology, and most people seem to be on board with wearables becoming a part of their daily life.

Stocks to Consider

Ericsson currently holds a Zack Rank #4 (Sell). Some better-ranked stocks in the same space include Ubiquiti Networks, Inc. (NASDAQ:UBNT) , Sonus Networks, Inc. (NASDAQ:SONS) and Clearfield, Inc. (NASDAQ:CLFD) . While Ubiquiti sports a Zacks Rank #1 (Strong Buy), Sonus and Clearfield both hold a Zacks Rank #2 (Buy).