According to the IDC Worldwide Quarterly Wearable Device Tracker, the market has polarised into basic and smart wearables. There are over 30 vendors playing in the pool using Android Wear, Tizen, WatchOS, RTOS and others. The majority have a basic three-axis accelerometer and connect via Bluetooth to a smartphone while the more expensive ones add Wi-Fi, continuous heart-rate monitoring, GPS, barometers, NFC, speaker, microphone, galvanic skin sensor, UV monitor and water resistance/proofing.
Basic wearables — fitness bands with varying degrees of smart features — accounted for 85% of the market, experiencing double-digit growth. Much of the increase was attributed to the launch of newer models and expanding user base due to an increased awareness of the need to get fit and monitor progress. IDC expects the momentum for basic wearables to continue for the remainder of 2016. Smart wearables, essentially defined as capable of running third-party apps and providing a fuller range of smart notifications, will continue to struggle in the near term.
"It's still early days, but we already see a notable shift in the market," said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers. "Where smartwatches were once expected to take the lead, basic wearables now reign supreme. Simplicity is a driving factor, and this is well reflected in the top vendor list, as four out of five offer a simple, dedicated fitness device. Meanwhile, from a design perspective, many devices are focusing on fashion first while allowing the technology to blend in with the background."
|Top Five Wearable Device Vendors, Worldwide Shipments, Market Share and Year-Over-Year Growth, 3Q 2016 (Units in Millions)|
|Vendor||3Q16 Unit Shipments||3Q16 Market Share||3Q15 Unit Shipments||3Q15 Market Share||Year-Over-Year Growth|
|Source: IDC Worldwide Quarterly Wearable Device Tracker, December 5, 2016|
Fitbit remained the market leader in 3Q16 as the vendor released a refresh for the Charge HR with the Charge 2. The acquisition of Pebble and the potential to expand into the smartwatch category present an opportunity for the company to be more than just a fitness brand.
Xiaomi's new Mi Band includes heart-rate tracking and is priced well below any competition, making it more suitable for impulse buying than any other fitness band. Xiaomi, across all business lines, continues to struggle to gain any significant traction outside its home country of China.
Garmin captured the third position as the company with one of the widest portfolios among all the vendors in this market. Its strategy and branding remain focused on fitness die-hards. The company has managed to expand its channel presence over the past year, focusing on numerous sports equipment chains and independent retailers. With the launch of recent products like the fenix Chronos, Garmin has also managed to improve its image as a company with a great fashion sense.
Apple's had a record 71% year-over-year decline as users held off buying an aging line-up with an unintuitive user interface. Both issues have been addressed with the Watch 2, but its success will be muted as the smartwatch category continues to be challenged.
Samsung’s meteoric 89.9% growth was due mainly to the Gear Fit 2 which is one of the best, most fully-featured fitness watches with smart benefits at a street price of $200. iTWire’s review is here and its S Health App is now on par with, or exceeds, other competitors.
Samsung was also able to sustain shipments of its older Gear S2 (iTWire review here), particularly the cellular-enabled versions, through various wireless service providers. The new Gear S3 has recently superseded this. iTWire review here. The “other” category is interesting and includes smartwatches from Huawei, LG, Sony, Lenovo (Moto), Tom Tom, various fashion houses, and a huge array of fitness bands ranging in price from well under $25 to about $200 – the fitness price sweet spot.
Fitness trackers sell better than smartwatches because they are cheaper and solve a clearly-defined problem. Interestingly, competition in the smartwatch space may be waning, with major manufacturers saying they will hold off investing until the category matures.