Apple Inc. (NASDAQ:AAPL) introduced the Apple Watch last year, entering the wearables industry. However, Fitbit is still the leader in the industry, according to data on the wearable market released by research firm IDC.

Apple Watch 2 AAPL
Image Credit: Apple Inc.

Basic wearables versus smart wearables

IDC’s data, which is from the second quarter, shows that the wearable market has been on the rise, but smart wearables saw a significant decline. In the second quarter, total shipments of wearable devices reached 22.5 million with an overall increase of 26.1% on YoY basis. IDC attributes this growth to new emerging use cases for the devices. Fitness functionality is “low-hating fruit for wearables” according to IDC researchers, who believe factors such as mobile payment support, productivity opportunities and communication functionality are responsible for the growth.

Growth was seen in the overall wearable market, but a stark contrast existed between basic wearables and smart wearables categories. The former consists of wearables that do not support third-party apps, such as the most basic fitness trackers, while the latter consists of smartwatches such as the Apple Watch and Android Wear offerings, explains 9to5 Mac.

In a statement, IDC’s wearables research manager, Ramon Llamas, said, “Smart wearables, meanwhile, are still struggling to find their place in the market. There is plenty of curiosity about what smart wearables – particularly smartwatches – can do, but they have yet to convince users that they are a must-have item.”

Year-over-year growth of 48.8% was seen in shipments of basic wearables, while shipments of smart wearables declined by 27.2%. According to IDC, the reason for the decline is a lack of clear purpose for smart wearables, whereas there is a clear idea of functionality with the marketing for basic wearables.

Apple (AAPL) losing market share sharply

With 5.7 million devices shipped in the second quarter, Fitbit remained the leader of the wearable market. The second-biggest wearable shipper was the Chinese electronics maker Xiaomi, with Apple Inc. (NASDAQ:AAPL) being in the third spot, followed by Switzerland-based technology company Garmin, reports Fortune.

According to IDC, Apple Inc. (NASDAQ:AAPL) lost 50% of the share in the global wearable market on a YoY basis. From 20.3% or 3.6 million last year, its share of shipped wearable devices fell to 7% or 1.6 million. Even though Apple Inc. (NASDAQ:AAPL) holds a strong position in smartphones and tablets, it is facing a serious challenge in mastering the emerging market of wearables, and this is evident from the decline.

Hopefully the much-awaited Apple Watch 2 will help the U.S. firm grab a greater share of this growing market.