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.
Apple sold 1.1 million smart watches in the quarter, down from 3.9 million in the same period a year-ago, a drop of 71% year-over-year, according to IDC. That places it in fourth place among global wearable device vendors, trailing Fitbit, Xiaomi, and Garmin. However, Apple is still the dominate smartwatch maker with just over 40% of the market — though that’s down from just over 70% in the third quarter of 2015. (IDC considers the wearables market to include smartwatch, fitness trackers and other devices.)
“Apple's decision to launch its second-generation watches in mid-September, towards the end of the quarter, contributed to its year-over-year decline in 3Q16. However, the primary reasons for the downturn were an aging lineup and an unintuitive user interface,” says IDC. “Though both issues have been addressed with the latest generation watches, Apple's success will likely be muted as the smartwatch category continues to be challenged.”
Basic wearables, primarily comprised of fitness bands, accounted for 85% of the wearables market in 3Q16 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," says 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 offer 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," adds 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."