Despite fierce competition from Chinese vendors, Apple remains the biggest player in the global wearables market, according to research firm IDC. The massive success of Apple Watch Series 4 and AirPods helped the Cupertino company maintain its lead. It’s a big feat for the iPhone maker because it doesn’t sell basic wearable devices like activity trackers and fitness bands. It focuses on fully-featured smartwatches.
Ear-worn devices are also wearables
According to the latest data from IDC, the global wearables market grew a handsome 31.4% in the fourth quarter of 2018 to 59.3 million units. For the full year 2018, worldwide wearable shipments jumped 27.5% to 172.2 million units. Smartwatches accounted for roughly 34.3% of the total shipment. The remaining portion was attributed to fitness bands, activity trackers, and ear-worn devices.
The market research firm has revised its methodology to include ear-worn devices in the wearables segment. Ear-worn devices include wireless earbuds such as Bose QC35II, Apple’s AirPods, and Google’s Pixel Buds. Apple already includes AirPods as part of its wearables business. This segment accounted for 21.9% of the global wearables market in 2018, and saw a 66.4% growth last year. By comparison, smartwatch sales grew by 55.2%.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
IDC analyst Jitesh Ubrani said the market for ear-worn wearables grew substantially in 2018, and the trend will continue in the coming years. Wireless headphones are increasingly becoming a necessity for users around the world for a variety of reasons. Smartphone vendors are ditching the traditional 3.5mm headphone jack, which encouraged users to switch to wireless earphones. The rise of in-ear biometrics and smart assistants is also driving the shipments of ear-worn wearables.
Apple biggest player in global wearables market
According to IDC, Apple shipped 16.2 million wearable devices in the fourth quarter of 2018, giving it a 27.4% market share. Of them, 10.4 million were Apple Watches and 5.8 million units were ear-worn devices such as AirPods and Beats headphones. IDC predicts Apple’s wearables business will continue to grow in the foreseeable future. The launch of Apple Watch Series 4 helped boost its sales during the holiday quarter.
For the full year 2018, Apple shipped 46.2 million wearable devices, up 39.5% from 33.1 million units shipped in 2017. The Cupertino company also increased its market share from 24.5% in 2017 to 26.8% in 2018.
Apple and Fitbit both are building out their digital health services. Apple has realized that health and fitness tracking plays a vital role in the sales of smartwatches. So, it has been adding more and more health-features to its wearable devices.
Huawei, Xiaomi biggest gainers
Chinese vendor Xiaomi was a distant second. It sold 7.5 million units in Q4, 2018 for a market share of 12.6%. Its Q4 shipments witnessed a strong 43.3% growth compared to the same period a year prior. During the full year 2018, Xiaomi shipped 23.3 million units, which gave it a 13.6% market share. Its full-year shipments rose 44.6% compared to 2017. Xiaomi remains a strong player in the Chinese market, but its recent investments in Asian and European countries helped fuel this growth.
Chinese telecom equipment maker Huawei was the third largest player in the global wearables market during the fourth quarter of 2018. Huawei shipped 5.7 million wearables during the fourth quarter (9.6% market share), up a staggering 248.5% from the same quarter in 2017. Huawei’s full-year shipments stood at 11.3 million units, giving it a market share of 6.6%. Its full-year sales rose 147.3%.
Fitbit is fighting to stay in the top five
Fitbit, which was once the biggest player in the global wearables market, remained among the top five largest vendors. It shipped 5.5 million devices in the fourth quarter, capturing 9.4% of the market. Its shipments grew merely 3% in Q4, 2018 compared to the same period of 2017. In the full year 2018, Fitbit shipped 13.8 million units, which gave it an 8% market share. By comparison, Fitbit had sold 15.4 million units in 2017, which means its 2018 shipments declined by 10%.
Fitbit’s Charge 3 and Versa have been successful, but they are not enough to thwart the competition from Chinese vendors. Fitbit will benefit from its partnerships with large corporations and health insurers, who will distribute Fitbit devices to help their employees stay fit.
Samsung rounded out the top five. The Korean company is the largest player in the smartphone market, but lags far behind rivals in the wearables segment. Samsung sold 4 million wearable devices in Q4, 2018, up from just 2 million in Q4, 2017. For the full year 2018, the company shipped 10.7 million units, capturing 6.2% of the market.