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TechFitbit

Apple Took a Commanding Lead In Wearables In the Fourth Quarter, As Fitbit Slipped

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Aaron Pressman
Aaron Pressman
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By
Aaron Pressman
Aaron Pressman
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March 1, 2018, 4:14 PM ET
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Apple is decisively taking control of the market for smart wearables devices, after posting tremendous growth with its third-generation line of smartwatches in the fourth quarter.

Without Apple, the wearable market would have actually shrunken in the fourth quarter, according to research firm International Data Corp. Apple’s shipments jumped 58% to 8 million devices from 5.1 million a year earlier, while the entire rest of the field shipped 29.9 million, just below the 30.1 million shipped a year earlier excluding Apple. Combined, the market grew 8% to 37.9 million units shipped.

The culprits behind the malaise in the rest of the market were Fitbit, the former leader, and Chinese manufacturer Xiaomi, which focuses on the low end. Fitbit’s (FIT) shipments slumped 17% to 5.4 million units in the quarter, as sales of its new $300 Ionic smartwatch didn’t cover slipping sales of its cheaper fitness tracking products. Fitbit’s stock plummeted on Tuesday after it first reported the weaker-than-expected sales.

Xiaomi’s shipments fell 5% to 4.9 million, as its dependence on its home market in China turned into a weakness when wearable sales there turned down in the fourth quarter.

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Apple (AAPL) got a boost in the quarter as its Apple Watch Series 3, which included the option of cellular connectivity for the first time, went on sale in late September. “Interest in smartwatches continues to grow and Apple is well-positioned to capture demand,” IDC analyst Ramon Llamas wrote in the report. “User tastes have become more sophisticated over the past several quarters and Apple pounced on the demand for cellular connectivity and streaming multimedia.”

At Garmin, which focuses on fitness and outdoor users, shipments increased 5% to 2.5 million. While sales of more basic devices have generally slipped, Garmin (GRMN) got a boost from both its lesser line of Vivo branded fitness trackers and its more expensive Fenix-branded smartwatches in the quarter.

Fossil Group (FOSL), the fashion watch maker, didn’t have a particularly strong fourth quarter, but ended the year as the fifth-ranked wearables seller on the strength of its line that runs Google’s (GOOGL) Android Wear software. Shipments rose 133% for the year. It’s stock has been the opposite of Fitbit, nearly doubling in price on February 14 after it reported much better than expected sales.

But all of the turmoil masked a market that is evolving and heading for stronger growth ahead, IDC analyst Llamas noted. Many vendors, including TomTom (TMOAY), Intel (INTC), and Jawbone, have dropped out while new brands like Fossil have dived in.

“The remaining vendors – including multiple start-ups – have not only replaced (those that dropped out), but with devices, features, and services that have helped make wearables more integral in people’s lives,” Llamas wrote. “Going forward, the next generation of wearables will make the ones we saw as recently as 2016 look quaint.”

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