Smartwatches are displacing fitness trackers
Consumer appetite for high-end functional wrist wearables like smartwatches is depressing sales volumes of basic fitness trackers, according to the latest global wearables report from the IDC.
According to the report, Apple surged ahead to become the No. 1 wearable vendor in Q4 2017, seeing double-digit year-over-year (YoY) growth, overtaking fitness tracker-oriented competitors, like Fitbit and Xiaomi, that saw YoY shipment declines. Increased capabilities of smartwatches, such as health features and LTE connectivity, have likely been the key factors in catalyzing consumers' interest in smartwatches over fitness trackers.
Here are two of the most notable takeaways from the report:
- Companies that focus on fitness tracker wearables are seeing shipments decline. Fitbit, which also generates most of its sales from fitness trackers, saw overall shipments decline 17% YoY during Q4 2017, marking the fifth consecutive quarter of YoY decline. And Fitbit's first smartwatch, the Ionic, failed to meet the company's aggressive goals, according to CEO James Park. Meanwhile, Xiaomi saw shipments decline 5% YoY to 4.9 million in Q4 2017.
- But Apple, which focuses exclusively on high-end smartwatches, saw 56% YoY growth in shipments, and overtook its competitors as the No. 1 wearables vendor. Apple's smartwatch shipments spiked to 8 million in Q4 2017. This propelled the company to become the single biggest wearables vendor for the first time, as it captured 21% of the market during the quarter, and pushed Fitbit and Xiaomi to the side in the process. Apple's impact was so substantial that the Apple Watch's stand-out Q4 was the driving force behind positive shipment growth in the overall wearables market during the quarter; without Apple, the wearables market would have contracted, according to the IDC. Overall, shipments of wearables grew 8% YoY to 38 million units in Q4.
The data indicates that consumers are warming to high-end, multipurpose smartwatches over more affordable yet basic fitness trackers, particularly as new capabilities come to smartwatches. Stand-alone LTE connectivity, which lets a smartwatch function without being tethered to a smartphone, should drive smartwatch adoption in the year ahead.
Notably, increased demand for the Apple Watch was largely driven by the release of Apple's most recent version, the Apple Watch Series 3, which boasts built-in cellular support, eliminating the watch's reliance on the iPhone, according to IDC. This highlights the mass appeal of a smartwatch with LTE cellular connectivity, as the lack of cellular connectivity has historically served as one of the biggest inhibitors to adoption. As more consumers adopt the LTE-version of the Apple Watch, it's likely that new use cases and smartwatches will emerge, effectively driving adoption of LTE-enabled smartwatches.
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