Market Trends

Basic Wearables Soar While Smart Wearables Stall in Second Quarter

Shipments of wearable devices reached 22.5 million in the second quarter of 2016, according to the International Data Corporation’s recent Worldwide Quarterly Wearable Device Tracker report. IDC is a tech market research firm headquartered in Massachusetts.

The overall market for wearable devices grew 26.1 percent year over year, despite a decline in shipments from Apple, one of the world’s largest wearable device vendors.

“Fitness is the low-hanging fruit for wearables,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, in a prepared statement. “However, the market is evolving and we’re starting to see consumers adopt new functionality, such as communication and mobile payments, while enterprises warm to wearables’ productivity potential.”

While the overall wearables market grew during Q2 2016, two categories traveled at different speeds and directions. Basic wearables (devices that do not support third party applications) grew 48.8 percent from Q2 2015 levels, while smart wearables (devices that support third party applications) declined 27.2 percent year over year.

“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 for IDC’s Wearables division, in a statement. “Consequently, basic wearables accounted for 82.8 percent of all wearable devices shipped during the quarter, and more vendors continue to enter this space.”

Llamas continued, “Smart wearables, meanwhile, are still struggling to find their place in market. 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.”

Here are some vendor highlights from IDC’s wearables report:

Fitbit’s dominance remains unchallenged for now as the company’s name is synonymous with fitness bands. The latest Charge 2 and Flex 2 are indicative that the company is growing up, giving form and function equal importance. Fitbit saw 28.7 percent growth in Q2 2016, compared to Q2 2015. The company’s recent acquisition in the mobile payments arena should also help ensure success in the longer term.

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. The second quarter of 2016 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. The company saw a 56.7 percent decline in growth in Q2 2016, when compared to Q2 2015.

Garmin’s vertical integration and constant expansion of the ConnectIQ app store have allowed the company to slowly expand its channel presence and gain consumer awareness. While it remains focused on fitness enthusiasts and athletes, the latest design of the Fenix Chronos will help broaden its appeal to the masses. Garmin witnessed growth of 106.7 percent, when Q2 2016 is compared to Q2 2015.

For more information, visit IDC’s “Worldwide Quarterly Wearable Device Tracker” site.

About the Author

Richard Chang is associate editor of THE Journal. He can be reached at [email protected].