Smartwatch growth surges ahead of Apple, Fitbit offerings

Smartwatch sales surged in the second quarter while sales of basic wearable fitness trackers declined for the first time, signalling a turning point in the market, according to data released Thursday.

Wearable-device sales grew 10.3% to 26.3 million units in the second quarter, according to tech trends tracker International Data Corp. What’s notable is that the second quarter marked the first where sales of basic wearable devices — those that do not run third-party apps — faltered, declining 0.9% for the year.

At the same time, sales of smartwatches like Apple Inc.’s AAPL, +0.40%  Apple Watch and those running the Android Wear platform from Alphabet Inc.’s GOOG, +1.05% GOOGL, +1.23%  Google jumped 60.9% for the quarter, IDC said.

“The transition towards more intelligent and feature-filled wearables is in full swing,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, in a statement. “For years, rudimentary fitness trackers have acted as a gateway to smartwatches and now we’re at a point where brands and consumers are graduating to a more sophisticated device.”

China’s privately held Xiaomi Inc. held onto a slight lead in market share with 13.4% of sales and shipping 3.5 million devices. Apple and Fitbit Inc. FIT, +1.01%  ran neck-and-neck as the Apple Watch maintained 13% market share with 3.4 million devices shipped while Fitbit was close behind with about 3.4 million units for a 12.9% share.

Apple shares rose 0.5% to $164.23 in recent trading, while Fitbit shares gained 1.4% at $6.05. Apple is also expected to launch its new iPhone at a Sept. 12 event.

“There is growing interest from the medical industry to adopt wearables and consumer expectations are also on the rise,” Ubrani noted. “This is where companies like Apple and Fitbit have the potential to maintain their lead as their investments in the tracking and perhaps diagnosing of diseases will be a clear differentiator from low-cost rivals.”

Read: How Apple could make smartwatches more popular, and potentially help Fitbit

Garmin Ltd. GRMN, -0.44%  shipped 1.4 million units for a 5.4% market share, and Fossil Group Inc. FOSL, -3.04%  jumped into fifth place, shipping 1 million units for a 4% market share, a more than 200% jump from the year ago quarter, according to IDC. Garmin shares declined 0.4% to $51.55, and Fossil shares slipped 1.8% to $8.40.

Other device manufacturers, however, accounted for 51.3% of market share, or 13.5 million units, IDC said.

On Tuesday, Fitbit introduced a $300 smartwatch that doesn’t need to be connected to a phone as a challenge to the Apple Watch, and analysts took note.

Read: Apple hits record highs ahead of iPhone reveal

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