Fitbit may hold the lead in wearables for now, but Apple is close on its heels. Apple shipped 3.6 million Apple Watches in the second quarter of 2015, just 0.8 million behind Fitbit’s 4.4 million wearables, according to IDC's Worldwide Quarterly Wearable Device Tracker released today.
"Anytime Apple enters a new market, not only does it draw attention to itself, but to the market as a whole," said Ramon Llamas, research manager for IDC's wearables team, in a statement. Apple’s entry into the wearables market may actually prove to be a rising tide that lifts all boats, according to Llamas.
"Its participation benefits multiple players and platforms within the wearables ecosystem, and ultimately drives total volumes higher," he said. "Apple also forces other vendors, especially those that have been part of this market for multiple quarters, to re-evaluate their products and experiences.”
The Standard for the Sector
Apple made a splash with the release of the Apple Watch, its first entry in the wearable device market, earlier this year. However, despite its relatively newcomer status, Apple will soon become the standard by which other wearable device manufacturers will be measured, Llamas said. That could have a profound effect on the strategic decisions of other players in the sector, particularly with regard to which new devices they decide to launch.
So far, the Apple Watch has made its greatest impact on so-called smart devices. "About two of every three smart wearables shipped this quarter was an Apple Watch," said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, in the statement. "Apple has clearly garnered an impressive lead in this space and its dominance is expected to continue.”
On the surface, it would seem that Fitbit has nothing to worry about. The company realized triple-digit unit sales growth year-over-year and double-digit increases in both revenue and profits.
Smart Versus Basic
But even though Fitbit has sold more devices than Apple, it only sells basic devices, not smart wearables. Ubrani said that basic devices like Fitbit are expected to cede market share to smart devices like the Apple Watch over the next few years. That puts Apple in an excellent position to vault itself into the number one spot in the wearables market in the near future.
Smart wearables, such as the Apple Watch, are able to run third-party apps, much like other mobile devices. Meanwhile, basic wearables like Fitbit only run proprietary software and are usually focused on just one type of activity, such as fitness tracking. The more versatile smart wearables tend to cost more than their basic cousins.
The divide between the cost of basic and smart wearables is expected to grow over time, IDC said. That will create a challenge for basic wearable makers like Fitbit to carve out a space in the more price-sensitive end of the market, while still providing enough functionality to be attractive to consumers.