Wearables Market Grows 3.1% in the Third Quarter

While the smartwatch market took a tumble this quarter, the overall wearables market grew 3.1% year over year in the third quarter of 2016 (3Q16). Total wearables shipments reached 23 million in the quarter, according to data from the International Data Corporation, (IDC) Worldwide Quarterly Wearable Device Tracker.

 Basic wearables, primarily comprised of fitness bands, accounted for 85% of the market and experienced double-digit growth. Much of the increase was attributed to the launch of newer models, an expanding user base, and an enticing summer season that allowed people to step out of their homes. IDC expects the momentum for basic wearables to continue for the remainder of 2016 as the holiday season is now in full swing. However, smart wearables capable of running third party apps will likely continue to struggle in the near term.

 "It's still early days, but we're already seeing a notable shift in the market," said Jitesh Ubrani senior research analyst for IDC Mobile Device Trackers. "Where smartwatches were once expected to take the lead, basic wearables now reign supreme. Simplicity is a driving factor and this is well reflected in the top vendor list as four out of five offers a simple, dedicated fitness device. Meanwhile, from a design perspective, many devices are focusing on fashion first while allowing the technology to blend in with the background."

 "Smart wearables have been down in recent quarters, but clearly not out," noted Ramon Llamas, research manager for IDC's Wearables team. "As user tastes change, so will their needs. That's the opportunity for smart wearables with multi-functionality and third-party applications, both for consumers and business users. To get there, we need to see more intuitive user interfaces, seamless user experiences, standalone connectivity, and applications that go beyond health and fitness and into personal and professional productivity."

 Vendor Highlights

Fitbit was once again the market leader in 3Q16 as the vendor released a long awaited refresh for the Charge HR with the Charge 2. Despite recent negativity surrounding the company's long-term strategy and stock price, IDC expects Fitbit to continue leading the pack in the near term. The acquisition of Coin and the potential to expand into the smartwatch category present an opportunity for the company to be more than just a fitness brand.