Fitness Trackers in the Lead as Wearables Market Grows 3.1% in the Third Quarter, According to IDC

FRAMINGHAM, Mass.--()--While the smartwatch market took a tumble this quarter, the overall wearables market grew 3.1% year over year in the third quarter of 2016 (3Q16). Total wearables shipments reached 23 million in the quarter, according to data from the International Data Corporation, (IDC) Worldwide Quarterly Wearable Device Tracker.

Basic wearables, primarily comprised of fitness bands, accounted for 85% of the market and experienced double-digit growth. Much of the increase was attributed to the launch of newer models, an expanding user base, and an enticing summer season that allowed people to step out of their homes. IDC expects the momentum for basic wearables to continue for the remainder of 2016 as the holiday season is now in full swing. However, smart wearables capable of running third party apps will likely continue to struggle in the near term.

"It's still early days, but we're already seeing 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."

"Smart wearables have been down in recent quarters, but clearly not out," noted Ramon Llamas, research manager for IDC's Wearables team. "As user tastes change, so will their needs. That's the opportunity for smart wearables with multi-functionality and third-party applications, both for consumers and business users. To get there, we need to see more intuitive user interfaces, seamless user experiences, standalone connectivity, and applications that go beyond health and fitness and into personal and professional productivity."

Vendor Highlights

Fitbit was once again the market leader in 3Q16 as the vendor released a long awaited refresh for the Charge HR with the Charge 2. Despite recent negativity surrounding the company's long-term strategy and stock price, IDC expects Fitbit to continue leading the pack in the near term. The acquisition of Coin 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. Despite its worldwide growth in 3Q16, the company managed to lose market share as almost every other vendor outpaced its growth. 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. Yet 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. Moreover, 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 decision to launch its second-generation watches in mid-September, towards the end of the quarter, did contribute to its year-over-year decline in 3Q16. However, the primary reasons for the downturn were an aging lineup and an unintuitive user interface. Though both issues have been addressed with the latest generation watches, Apple's success will likely be muted as the smartwatch category continues to be challenged.

Samsung released two new models, Gear Fit 2 and the Icon X, in 3Q16. Around the globe, the company was able to move large volumes of its latest wearables thanks to bundles offered with the Note 7 and other Samsung smartphones. Though the Note 7 was recalled, many consumers were allowed to retain their Fit 2 or Icon X, thereby artificially inflating Samsung's growth. Bundles aside, Samsung was able to sustain shipments of its Gear S2, particularly the cellular-enabled versions, through various wireless service providers.

 
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
1. Fitbit 5.3 23.0% 4.8 21.4% 11.0%
2. Xiaomi 3.8 16.5% 3.7 16.4% 4.0%
3. Garmin 1.3 5.7% 1.2 5.3% 12.2%
4. Apple 1.1 4.9% 3.9 17.5% -71.0%
5. Samsung 1.0 4.5% 0.5 2.4% 89.9%
Others 10.4 45.3% 8.3 37.0% 26.1%
Total 23.0 100.0% 22.3 100.0% 3.1%
Source: IDC Worldwide Quarterly Wearable Device Tracker, December 5, 2016

Table Note:

  • Vendor shipments are branded device shipments and exclude OEM sales for all vendors.

In addition to the table above, an interactive graphic showing worldwide market share (based on unit shipments) for the top 5 smartwatch vendors over the previous five quarters is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad. The IDC Tracker Chart app is also available for Android Phones and Android Tablets.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.

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Contacts

IDC
Ramon Llamas, 508-935-4736
rllamas@idc.com
or
Jitesh Ubrani, 416-673-2214
jubrani@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com

Release Summary

The worldwide wearables market grew 3.1% year over year in the third quarter of 2016 with shipments reaching 23 million units, according to the IDC Worldwide Quarterly Wearables Tracker.

Contacts

IDC
Ramon Llamas, 508-935-4736
rllamas@idc.com
or
Jitesh Ubrani, 416-673-2214
jubrani@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com