Why The Destiny Of Wearables Is In Their Own Hands
Product Management

Why The Destiny Of Wearables Is In Their Own Hands

David Bolton • March 6, 2017

Wearables are not dead … just refocusing.

Rumors that wearables have suffered a fate worse than death may prove to be unfounded.

According to IDC’s Worldwide Quarterly Wearable Device Tracker, shipments of wearables hit an all-time high of 33.9 million units in the last financial quarter of 2016—a year-on-year increase of 16.9%. Total shipments for the year reached 102.4 million units, a figure that represented a 25% rise from 2015.

Health and fitness is the main reason for owning a wearable device, but there is a consensus that manufacturers have accepted that monitoring health from your wrist is all people really want. Basic fitness trackers are still the go-to device for anybody that wants a wearable, with the latest generation of smart wearables now pivoting to be more fitness-focused, IDC said.

In addition, the reliance on a smartphone connection will decrease as more devices are released with cellular connectivity. Once wearables are freed from the need to be paired with a smartphone, the untethered experience that the wearable device can provide could (in theory) increase consumer demand.

IDC attributed the apparent resurgence of wearables to a blurring of lines between smart devices and more basic versions. The single purpose of the basic wearable—fitness, for example—has been tweaked to make that style of wearable a multi-purpose device that can compete (in terms of data collection) with first-generation smartwatches.

“Meanwhile, smart wearables are also evolving,” said IDC’s research manager for wearables Ramon Llamas. “Health and fitness remains a major focus, but once these devices become connected to a cellular network, 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.”

Increased Shipments Could Mean Increased Adoption

Fitbit remains the market leader, despite the fact that the company recorded a year-on-year decline of 22.7% in the last financial quarter of 2016. The problem for Fitbit is that it has been focused on the United States, a market that is close to saturation point for fitness trackers, IDC said. Despite that, Fitbit still shipped 6.5 million units in Q4 2016.

Apple had its best quarter ever in the wearables space.

IDC cited the release of Apple Watch 2 in September as one reason why the company had a year-on-year growth rate of 13%. In retrospect, this incremental increase also backs up Apple CEO Tim Cook’s recent assertion to Reuters that “sales growth is off the charts” for the Apple Watch series.

idc wearables q42016

Chinese manufacturer Xiaomi’s determination to stick with its low-cost device strategy saw the company achieve a year-on-year growth rate of 96.2% in the last quarter of the year. On the flip side, Xiaomi does not have brand recognition outside of China and that could limit its expansion in the future.

Samsung saw year-on-year growth of 37.9%, although it only touched around 5.6% of the market. The advantage that Samsung has over its rivals is that it—for the moment, anyway—is the only manufacturer with cellular-enabled wearables. LTE connectivity is a major plus for Samsung’s smartwatches, even more so now that Android Wear 2.0 has finally seen the light of day.

“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 IDC’s senior research analyst for mobile device trackers Jitesh Ubrani. “As the technology disappears into the background, hybrid watches and other fashion accessories with fitness tracking are starting to gain traction. This presents an opportunity to sell multiple wearables to a single consumer under the guise of ‘fashion.’ But more importantly, it helps build an ecosystem and helps vendors provide consumers with actionable insights thanks to the large amounts of data collected behind the scenes.”

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