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FRAMINGHAM, MA – Shipments of wearable devices reached 22.5 million in the second quarter, according to IDC.

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.

"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 the quarter its two categories traveled at different speeds and directions. Basic wearables (devices that do not support third party applications) grew 48.8% from year-ago 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."

Fitbit remained the top supplier and will remain unchallenged for now, IDC said. Xiaomi's Mi Bands remain extremely popular in China, continuing its focus on value conscious consumers. The challenge for Xiaomi 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.


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