Research firm IDC is today out with its latest data concerning the wearable market. IDC’s data, which reflects the second quarter of 2016, shows an overall increase in the wearables market but smart wearables, described as those that support third-party apps, saw a significant decline.

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IDC says that shipments of wearable devices reached 22.5 million in the second quarter of 2016, for an overall increase of 26.1 percent year-over-year, which the research firm attributes to new emerging use cases for the devices. IDC describes fitness functionality as the “low-hating fruit for wearables” and attributes the growth to things like improved communication functionality, mobile payment support, and productivity opportunities.

As mentioned earlier, the overall market of wearables grew but there was a stark contrast between the two categories: basic wearables and smart wearables. The former consists of wearables that do not support third-party applications, like most basic fitness trackers, while the latter consists of smartwatches like the Apple Watch and other Android Wear offerings.

Basic wearables increased 48.8 percent year-over-year, while shipments of smart wearables declined 27.2 percent. One issue IDC sees with smart wearables is a lack of clear purpose, whereas basic wearables are often marketed with a clear idea of functionality.

Perhaps most notably, IDC says that Apple was the only vendor to post a year-over-year decrease in shipment volumes. This is likely due to the lack of a product refresh during the first half of the year, though the price cut to the Apple Watch Sport did help sales rebound after the holiday season.

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. 2Q16 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.

Fitbit remains the dominant leader in the wearables market with a 25.4 percent share, while Xiaomi comes in with 14 percent of the market thanks to strong performance in China, and Apple lags at a 7 percent share, down from 20.3 percent this time last year.

The big picture here is simply that Apple has not refreshed the Apple Watch in over year, though it will be updated later this year. The new hardware alongside the improvements of watchOS 3 and the holiday shopping season should help the company rebound from a lackluster first half of 2016.

 

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Basic Wearables Soar and Smart Wearables Stall as Worldwide Wearables Market Climbs 26.1% in the Second Quarter, According to IDC

September 06, 2016 08:30 AM Eastern Daylight Time

FRAMINGHAM, Mass.–(BUSINESS WIRE)–Shipments of wearable devices reached 22.5 million in the second quarter of 2016 (2Q16) according to the International Data Corporation (IDCWorldwide Quarterly Wearable Device Tracker. Despite a decline in shipments for one of the largest vendors, the overall market for wearable devices grew 26.1% year over year as new use cases are slowly starting to emerge.

Shipments of wearable devices reached 22.5 million in Q2 2016, up 26.1% year over year, according to IDC.

“Fitness is the low-hanging fruit for wearables,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers. “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 2Q16, its two categories traveled at different speeds and directions. Basic wearables (devices that do not support third party applications) grew 48.8% from 2Q15 levels while smart wearables (devices that support third party applications) declined 27.2% 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, Wearables. “Consequently, basic wearables accounted for 82.8% of all wearable devices shipped during the quarter, and more vendors continue to enter this space. The danger, however, is that most devices end up being copycats of others, making it increasingly difficult to differentiate themselves in a crowded market.

“Smart wearables, meanwhile, are still struggling to find their place in the market,” added Llamas. “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. But this also means that it will be a slow transition from basic wearables to smart wearables.”

Vendor Highlights:

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’s recent accquistition in the mobile payments arena should also help ensure success in the longer term.

Xiaomi Mi Bands remain extremely popular in China. In every technology market, Xiaomi has focused on the value conscious consumers, and that trend continues. The recent launch of the Mi Band 2 includes heart rate tracking and still maintains a price below $20 USD. The challenge for Xiaomi, however, is growing beyond China’s borders and onto the global stage.

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. 2Q16 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.

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 mindshare. While it remains focused on fitness enthusiasts and athletes, the latest design of the Fenix Chronos will certainly help broaden its appeal to the masses.

This is the first time Lifesense has broken into the top five on the strength of by its low-cost Mambo fitness trackers shipping into China. It also connects with WeChat, an immensely popular messaging service in China, to share data with others without having to log into a separate application.

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