Wearables market shifting focus away from health

Global shipment for wearables reached an all-time high of 33.9 million units in the fourth quarter of 2016, up 16.9 % from the same quarter a year earlier.

Total shipments for the entire year reached 102.4 million devices, growing 25% compared to 2015.

IDC’s Worldwide Quarterly Wearable Device Tracker, which published the figures, noted that the market is huge but the utility and necessity of the devices have been questionable. With the market just a toss between the basic wearables and the smart wearables (or those capable of running third party applications), health and fitness remain a major focus for the major brands.

Ramon Llamas, research manager for IDC’s Wearables team, however, noted that once these devices become connected to a cellular network, the market can expect unique applications and communications capabilities to become available. “This will also solve another key issue: freeing the device from the smartphone, creating a standalone experience,” he said.

During the quarter, Fitbit maintained its dominance, holding the top position for both the quarter and the year. However, the company also faced one of its largest declines ever as it remained heavily focused on the US, a market that is quickly approaching saturation for fitness trackers. Though the company has grown in other parts of the world, IDC said it remained challenged as low-cost competitors eat away at Fitbit’s market share.

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China’s Xiaomi has continued to relentless pursue growth and the company has stuck with a low-cost strategy and has slowly tried to veer upstream in terms of pricing by introducing new devices with heart rate monitoring and a mildly higher selling price. However, IDC believes it still lacks the expertise and brand recognition to expand beyond its native borders in China.

Apple Watch Series 1 and Series 2 proved to be a magnificent success for the company as it was the company’s best quarter ever in the wearables market. IDC said Apple is one of the few companies that has been able to quickly refocus its watch to gain traction in the consumer market and is now introducing the smartwatch category to the commercial segment.

Garmin, which caters to a more dedicated fitness audience, experienced a slight decline of 4% in the fourth quarter. However, many of its users began to graduate from simpler fitness trackers to more sophisticated and expensive sport watches like those offered in the Fenix line. The new Fenix 5 announced at CES 2017 also shows promise as the new smaller size will help the device appeal to a broader audience.

Samsung rounded out the top 5 with the launch of two new models (Gear S3 Classic and Frontier) and remains the only major company offering cellular-enabled wearables. LTE connectivity has been a key differentiator for Samsung’s watches as it has helped decouple them from smartphones, but more importantly it has opened up a new channel (telcos) to help promote the Samsung watches.

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Beyond the top 5 vendors are new entrants, including fashion icons like Fossil along with their sub-brands and emerging companies like BBK and Li-Ning, that are tapping into niche segments of the wearables market. Fossil’s wearable product is a luxury/fashion device, while BBK focuses on child-monitoring devices, and Li-Ning on step-counting shoes.

“With the entrance of multiple new vendors with strengths in different industries, the wearables market is expected to maintain a positive outlook, though much of this growth is coming from vendor push rather than consumer demand,” said Jitesh Ubrani senior research analyst for IDC Mobile Device Trackers.

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