Wearables market grows by 3% in Q3; Fitbit, Xiaomi beat Apple: IDC

Global wearables market grew by 3.1% year-on-year in the third quarter of 2016 with fitness bands registering a double digit growth. The wearable shipments crossed the 23 million mark in the quarter, according to data from the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker.

Fitness bands had a staggering 85% of the market share. The launch of newer models, increasing user base, gave a boost to the wearable sales, said the IDC report on Tuesday. With the holiday season kicking in, IDC foresees the sales momentum to continue for the remaining part of 2016.

"It's still early days, but we're already seeing a notable shift in the market," said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers. "Where smartwatches were once expected to take the lead, basic wearables now reign supreme. Simplicity is a driving factor and this is well reflected in the top vendor list as four out of five offer a simple, dedicated fitness device. Meanwhile, from a design perspective, many devices are focusing on fashion first while allowing the technology to blend in with the background."

Fitbit remains the leader in the wearables segment in this quarter with a 23% market share. It shipped 5.3 million units. Despite recent negativity surrounding the company's long-term strategy and stock price, IDC expects Fitbit to continue leading the pack in the near term.

Next in line, according to the data, is Xiaomi with 16.5% market share that has managed to ship 3.8 million units in the third quarter. The new Mi band that includes heart rate tracking and is priced well below the competition has helped its numbers grow. However, China-based Xiaomi, across all business lines, continues to struggle to gain any significant traction outside its home country.

Garmin secured the third spot with its widest portfolio of wearable devices. It had a market share of 5.7% and shipped 1.3 million devices in the said quarter. With the launch of recent products like the Fenix Chronos, Garmin has also managed to improve its image as a company with a great fashion sense, the report said.

Even as Apple struggles to re-invent the smartwatch segment, it has seen a 12.5% decline from the last quarter. The primary reasons for the downturn according to IDC's report were an ageing line-up and an unintuitive user interface. Though both issues have been addressed with the latest generation watches, Apple's success will likely be muted as the smartwatch category continues to be challenged.

Samsung secured the last spot amongst the top five companies. With the launch of two new wearables, Gear Fit 2 and the Icon X, Samsung registered a healthy growth of 89.9% thanks to bundling of new wearables with its Note 7 smartphone. Though the Note 7 was recalled, many consumers were allowed to retain their Fit 2 or Icon X, thereby artificially inflating Samsung's growth.