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Wearable device shipments in 2015 rocketed up 171.6 percent over 2014 shipments, according to market intelligence provider International Data Corporation (IDC)’s preliminary Worldwide Quarterly Wearable Device tracker.
IDC names two drivers of the enormous growth: the fitness tracker trend and Apple’s entry into the market.
Apple Watch dropped into the wearables mix in 2015, pulling Apple into the top 5 vendors in less than a year. The move concentrated more consumer attention than ever on the smartwatch and wearable fitness sector.
“That’s not just helping Apple – it’s helping everyone in this market,” said Jitesh Ubrani, senior research analyst of IDC’s wearable device tracking reports.
Like many other smartwatches, Apple Watch includes fitness tracking software, harnessing the existing consumer interest in health-specific wearable devices.
Research on the actual health benefits of fitness trackers remains inconclusive (several studies show high abandonment rates of the trackers after the first few weeks of use), but their popularity is undeniable.
“You’re datafying what’s typically a mundane task,” Ubrani said.
Standing out on a crowded shelf
Ubrani says cannibalization of market share is still a few years out, but vendors will eventually need to get creative to stay relevant.
“Differentiation will ultimately come down to software and style,” he said.
Fitbit and Apple have implemented the latter strategy by partnering with fashion powerhouses Tory Burch and Hermés, respectively.
Although Android devices don’t make it into the top 5 vendors for 2014 or 2015, IDC predicts they will hold nearly 40 percent of world market share by 2019. According to an evaluation by industry research provider Smartwatch Group, the Android operating system is efficient and easy for app developers to build from, which could be key in what both IDC and Smartwatch Group predict to be a software-driven future.
“On the software side there is certainly a lot of room for the app ecosystems to grow. This will be led by innovation in hardware (e.g. adding cellular capabilities) and also by developer interest in capturing the additional installed base,” said Ubrani.
Garmin watches utilize sport-specific software, and product offerings include devices for golf, swimming, cycling, running, and even aviation, positioning Garmin to cover a number of niche markets.
“[Garmin’s] relatively high prices and solid margins reflect the viability of this strategy,” Smartwatch Group said in an evaluation of the company.
As for Chinese company Xiaomi, the biggest differentiator is price. Xiaomi’s Mi Band retails for $15, compared with over $100 for a Fitbit or Apple watch. Fortunately for U.S. retailers, IDC predicts nearly all of Xiaomi’s markets will remain within China’s borders for the foreseeable future.
Are trackers a fad? Ubrani thinks not. They’ve found their place in the market and seem here to stay.
“There will always be fitness fanatics,” he said.