Apple (AAPL - Free Report) continues to be the leading player in the wearables market, courtesy of Apple Watch, AirPods and Beats headphones.
According to the recently released IDC data, global shipments of wearables surged 94.6% year over year to 84.5 million in the third quarter of 2019. Earwear shipments accounted for almost half the market (40.7 million units), trailed by Wristband (19.2 million) and Smartwatch (17.6 million).
Apple’s wearable shipments were the highest at 29.5 million, up 195.5% year over year. Moreover, market share improved to 35% in third-quarter 2019 compared with 23% in the year-ago quarter.
Chinese company, Xiaomi ranked second, selling 12.4 million units of wearable devices, up 66.1% year over year. The company shipped 10 million units of Mi Band in the quarter.
However, Xiaomi’s market share declined to 14.6% in third-quarter 2019 compared with 17.1% in the year-ago quarter.
The other three in the top five list are Samsung, Huawei and Fitbit (FIT - Free Report) , with a market share of 9.8%, 8.4%, and 4.1%, respectively. While Samsung and Huawei gained market share, Fitbit lost.
Wearables Growth Potential Aplenty
The demand for wearables, particularly Smartwatches and ear-worn (earwear as defined by IDC) devices, is expected to remain strong in 2020 and 2021.
Per Gartner’s projections, cited by TechCrunch, global user spending on wearable devices will increase 27% year over year to $52 billion in 2020 and 22% to $63 billion in 2021. The market research firm estimates worldwide wearable devices end-user spending to reach $41 billion in 2019.
Moreover, according to Mordor Intelligence, the smart wearables market is anticipated to witness a CAGR of 19.1% over the 2019-2024 timeframe.
Apart from Smartwatches and ear-worn devices, fitness bands are gaining rapid adoption due to growing health awareness among consumers. Additionally, the infusion of AI, ML and IoT technologies is helping in improving the capabilities of fitness devices provided by the likes of Apple, Fitbit and Jawbone.
Apple’s Robust Portfolio to Aid Market Share
Apple’s wearables market domination is expected to continue owing to the strong adoption of AirPods and Apple Watch. The company’s focus on health features like ECG and fall detection in the Apple Watch Series 4 had been a game changer.
The solid adoption of Apple Watch Series 5 is now helping the iPhone maker strengthen its presence in the personal health monitor space. Notably, the watch is based on watchOS 6, which comes with additional healthcare and fitness features like Cycle Tracking, the Noise app and Activity Trends.
Per the latest data from Strategy Analytics, cited by MacRumors, Apple shipped 6.8 million smartwatches in the third quarter of 2019. The company leads the market with 47.9% share trailed by Samsung and Fitbit with 13.4% and 11.3%, respectively.
Alphabet’s Fitbit Acquisition to Heat Up Wearables Space
Although Samsung and Xiaomi are Apple’s closest rivals in the wearables market, Alphabet (GOOGL - Free Report) is expected to emerge as the biggest challenger, primarily due to the Fitbit acquisition.
The integration of Fitbit devices — activity trackers, smartwatches, wireless headphones, smart scales — will expand Alphabet’s technological platform (Android, smartphone, chromecast, smart display, Nest devices).
Moreover, Alphabet’s focus on infusing advanced AI and ML technologies into its platform is a key catalyst. Further, the addition of technologies (via acquisitions & partnerships) from Pebble, Misfit and Fossil is expected to provide Alphabet a competitive edge over Apple.
Earwear Competition Intensifying
The solid growth prospects of the ear-worn devices have attracted tech giants like Google, Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) .
Google forayed into the smart headphone market with Pixel Buds. Additionally, the search giant is witnessing growing adoption of Google Assistant by headphone makers like Sony, JBL and Bose. Further, Samsung’s Galaxy Buds allows users to access Google’s voice assistant.
Moreover, in September, Amazon launched Echo Buds with built-in Alexa functions. Priced at $129, the device directly competes with Apple AirPods ($159 starting price). Notably, Amazon collaborated with Bose to bring the latter’s Active Noise Cancellation to the new devices.
Microsoft also rolled out Surface Earbuds at its October 2019 event. The latest Surface Earbuds deliver intuitive voice and touch controls for calls, music and others. Users can play music on Spotify from Android phones by merely triple tapping on either earbud to experience an immersive Omnisonic sound.
While Microsoft (MSFT - Free Report) currently carries a Zacks Rank #2 (Buy), Apple, Alphabet, Amazon and Fitbit carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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