As Apple Watch Sales Reverse Course, Fitbit Takes Over Wearables Space

Shipments of wearable devices reached 22.5 million in the second quarter of 2016. The overall market for wearable devices grew 26% year-over-year as new use cases are slowly starting to emerge.

It’s not quite that simple, however. According to the International Data Corporation Worldwide Quarterly Wearable Device Tracker, basic wearables (devices that do not support third party applications) grew 49% from 2Q15 levels while smart wearables (devices that support third party applications) declined 27%.

“Fitness is the low-hanging fruit for wearables,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers.

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“Basic wearables, which include most fitness trackers, have benefited from a combination of factors: a clear value proposition for end-users, an abundant selection of devices from multiple vendors, and affordable price points,” said Ramon Llamas, research manager, Wearables. “Consequently, basic wearables accounted for 82.8% of all wearable devices shipped during the quarter, and more vendors continue to enter this space.”

Apple was the only vendor among the market leaders to post a year-over-year decrease in shipment volumes, primarily because it did not launch a new model on the anniversary of its first generation Watch. 2Q16 was the first full quarter of Apple’s reduced price strategy on the Sport model, which slightly helped the company rebound from its post-holiday slump. Fitbit’s dominance remains unchallenged for now.

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“Smart wearables are still struggling to find their place in the market,” added Llamas. “There is plenty of curiosity about what smart wearables – particularly smartwatches – can do, but they have yet to convince users that they are a must-have item. The good news is that smart wearables are still in their initial stages and vendors are slowly making strides to improve them. But this also means that it will be a slow transition from basic wearables to smart wearables.”