Wearables
 
IDC Reports Wearables Up 25% Y/Y to 102.4m Units in 2016
March 06, 2017

IDC reported that the worldwide wearable market reached a new all-time high with 33.9 million units in the fourth quarter of 2016, up 16.9% Y/Y. Shipments for the entire year grew 25% as new vendors entered the market and previous champions refreshed their product lineups. The year came to a close with 102.4 million devices shipped.
Beyond the top-5 vendors are new entrants, including fashion icons like Fossil along with their sub-brands and emerging companies like BBK and Li-Ning that are tapping into niche segments of the wearable market. In the case of Fossil, this happens to be as a luxury/fashion device, while BBK focuses on child-monitoring devices, and Li-Ning on step-counting shoes.

2016 also proved that there is more to wearables than just wrist-worn devices. Ear-worn devices (hearables) surpassed 1% of all shipments for the first time in a quarter and sensor-laden clothing accounted for more than 1% of the entire market for the full year 2016. Though these numbers were miniscule, they show promise as numerous devices are expected from notable vendors in 2017.
Fitbit held on to the top position for both the quarter and the year. However, the company faced one of its largest declines as it remained heavily focused on the US, a market that is quickly approaching saturation for fitness trackers. Though the company has grown in other parts of the world, it also remained challenged as low-cost competitors eat away at Fitbit's market share. Xiaomi's growth helped to close the gap between it and the top vendor. Like its other product lines, the company has stuck with a low-cost strategy and has slowly tried to veer upstream in terms of pricing by introducing new devices with heart rate monitoring and a mildly higher selling price. However, Xiaomi still lacks the expertise and brand recognition to expand beyond its native borders in China. Apple Watch Series 1 and Series 2 proved to be a strong success as it was Apple’s best quarter ever in the wearable market. The lower entry price point and the inclusion of GPS on the Series 2 along with a completely revamped user interface have helped the company grow its presence. Apple is one of the few companies that has been able to quickly refocus its watch to gain traction in the consumer market and has also been leading the charge on introducing the smartwatch category to the commercial segment. Garmin experienced a slight decline of 4% in the fourth quarter of 2016. However, the company did manage to significantly raise its ASP to US$258 in the fourth quarter from under US$200 last year. Garmin caters to a more dedicated fitness audience and this has worked well as many of its users began to graduate from simpler fitness trackers to more sophisticated and expensive sport watches like those offered in the Fenix line. The new Fenix 5 announced at CES 2017 also shows promise as the new smaller size will help the device appeal to a broader audience. Samsung rounded out the top-5 with the launch of two new models (Gear S3 Classic and Frontier) and remains the only major company offering cellular-enabled wearables. LTE connectivity has been a key differentiator for Samsung's watches as it has helped decouple them from smartphones, but more importantly it has opened up a new channel (telcos) to help promote the Samsung watches. Outside of watches, Samsung's portfolio also includes the Gear Fit 2 and the Icon X, though without any smartphone bundles, volumes for these wearables were lower than expected.
 
 
 
Table 1 IDC Report on Q416 Wearable Shipments

   Source: IDC
 
Table 2 IDC Report on 2016 Wearable Shipments

  Source: IDC

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