Apple wrests control of record-breaking wearables market

The worldwide wearables market continued its upward trajectory in the final quarter of 2017 with full year shipment volumes reaching new records.

Apple was the big mover thanks to a surge in smartwatch volume shipments, which saw the tech giant move past major competitors Fitbit and Xiaomi to claim the top spot in the market for both the quarter and the year.

Figures from the International Data Corporation (IDC) Worldwide Quarterly Wearables Device Tracker reveal total volumes for the quarter reached 37.9 million units, up 7.7 percent from the 35.2 million in the same quarter in 2016.

For the full year, total wearable device shipments reached 115.4 million units, up 10.3 percent from the 104.6 million in 2016.

"The 10.3 percent  year-over-year growth in 2017 is a marked decline from the 27.3 percent growth we saw in 2016. The slowdown is not due to a lack of interest – far from it. Instead, we saw numerous vendors, relying on older models, exit the market altogether," says IDC wearables research director Ramon T. Llamas.

"At the same time, the remaining vendors – including multiple start-ups – have not only replaced them, but with devices, features, and services that have helped make wearables more integral in people's lives. Going forward, the next generation of wearables will make the ones we saw as recently as 2016 look quaint."

Llamas says Apple can thank the rise of the smartwatch for its position at the top.

"Interest in smartwatches continues to grow and Apple is well-positioned to capture demand," says Llamas.

"User tastes have become more sophisticated over the past several quarters and Apple pounced on the demand for cellular connectivity and streaming multimedia. What will bear close observation is how Apple will iterate upon these and how the competition chooses to keep pace."

IDC Mobile Device Trackers senior research analyst Jitesh Ubrani says consumers are increasingly becoming prepared to spend more.

"Although prices for individual products has slowly declined, consumer preferences have shifted to more sophisticated devices and towards well recognised brands. It's due to this that the wearables market has seen healthy double-digit growth in average selling prices since 2016," says Ubrani.

"Combined with the potential to sell added software and services, wearables are proving to be an increasingly lucrative market for brands and service providers."

After spending several quarters close behind Fitbit and Xiaomi, the fourth quarter of 2017 was the first time Apple held the market leader position all to itself. IDC says Apple is catching the market at the right time with many users of basic wearables moving on to smartwatches and cellular connectivity.

Fitbit continued to adapt to the market after implementing broader distribution and promotion of its Ionic smartwatch and continued application development for its Fitbit OS platform. At the same time, the company took multiple steps to deepen its reach in healthcare, including several partnerships with major healthcare providers.

Xiaomi maintained its position among the leading vendors despite posting a slight decline in shipments. The company introduced a number of new products throughout the year after relying heavily on its aging MiBand 2. Despite this, its focus remains within its home region of China with less than 15 percent of its volumes heading elsewhere.

Garmin posted a slight increase in shipments for the year. The company relies heavily on its fitness tracker product line with its vivo-branded products helping to push its basic wearables selection back above the million units mark for the quarter. However, its smart wearables grew faster and came close to breaking the one million mark for the first time.

Of the top five vendors, Huawei saw the most growth as its recent third generation wrist bands continued to gain popularity in China helped the company become the number two wearables vendor within the country. However, like Xiaomi the country's focus remains within China, which saw shipments outside of the country actually decline 2 percent.