Proving the Business Case for the Internet of Things

Xiaomi maintains lead in wrist wearables, says IDC

Steve Rogerson
September 17, 2019

Xiaomi maintained its top position in the wrist-worn wearables market despite strong pressure from Apple, according to the International Data Corporation (IDC), which sees health applications driving market growth.
Shipments of wrist-worn wearables, inclusive of smartwatches, basic watches and wrist bands, reached 34.2 million units, up 28.8% year over year during the second quarter of 2019. The top five companies – Xiaomi, Apple, Huawei, Fitbit and Samsung – continued to push forward with new products and promotional campaigns during the quarter, collectively capturing 65.7% of the market, an almost 12-point gain from last year.
"Health is now at the forefront for these devices since companies have started providing actionable insights and prescriptive measures for end users," said Jitesh Ubrani, research manager for IDC. "Beyond health, mobile payment is also starting to become a mainstay as roughly two out of five wrist-worn wearables now include NFC, and many more simply use QR codes to complete transactions."
Xiaomi maintained the top position thanks to its latest Mi Band 4 (pictured). The company focuses almost exclusively on wrist bands and has used the low cost to lure users into its ecosystem of products. China remains the most active market for Xiaomi's products though expansion outside China continues to be a priority.
Apple ranked second in terms of units although the company outpaces all others in terms of dollar value as the average selling price for an Apple Watch was $448 during the quarter. The company also recently announced the Series 5, which should help the company maintain its position in the smart-watch market. IDC anticipates shipments of the Apple Watch to grow by 10.8% by the end of 2019 and capture 38.9% of all smart watches shipped during the year.
Huawei took the third position with its dual brand strategy aimed at capturing the mass market with the Huawei brand and a younger audience with the Honor brand. Many of the company's wearables are bundled with its smartphones, thereby putting the company in a challenging position given all the recent uncertainty around its smartphone business. More recently, there has been a bit of retrenchment as Huawei focused on the Chinese market during the quarter, growing its share, rather than prioritising international expansion as it had in past quarters.
Fitbit, the market pioneer, ranked fourth in the recent quarter. Though its smart-watch business declined, thanks to poor reception of the Versa Lite, the company did manage overall growth due to the popularity of the recently launched Inspire wristbands. Industry buzz surrounding the Versa 2 has been positive and the company's recent win in Singapore should help the company maintain positive momentum in the months to come.
Samsung rounded out the top five and achieved the highest growth rate among the top five due to the introduction of its low-cost wrist bands, the Galaxy Fit and Galaxy Fit e, and the popularity of the Galaxy Watch. Like Huawei, Samsung employs a bundling strategy that helps drive its wearables business and the company remains one of the few brands actively targeting users interested in having cellular connectivity built into their wearables.
"While the wrist-worn form factor has been very popular, the other important part is the experience,” said Ramon Llamas, research director for wearables. “Glancing at data – like notifications, fitness stats, and even checking the time – remain the popular use case, but to be able to interact with the device via smart assistants, scroll easily through data with the rotating bezel like Samsung’s smart watches, or connecting to smart home applications and devices raises wrist-worn wearables’ utility. Layer on top of this the growing market for applications on smart watches, and the value of these device increase further."
The positive momentum in wrist-worn wearables is expected to carry forward as the category is projected to reach 152.7 million units by the end of 2019 with 21.7% growth over last year, and 194.1 million units by 2023, with a compound annual growth rate (CAGR) of 6.2%. However, growth in the category is relegated to watches as the market for wristbands will remain essentially flat with a 0.1% CAGR and share will decline from 41.2% in 2019 to 32.5% in 2023.