Strategy Analytics released its numbers for Q1 2017 wearable sales, and there has been a shakeup in market leadership. Two years after the release of the Apple Watch, Apple Inc. (NASDAQ:AAPL) is not only decisively leading the smartwatch category, but surging Apple Watch sales have pushed it to top spot in overall wearable sales.
Long-time leader Fitbit Inc (NYSE:FIT) has been knocked down to third place, with China’s Xiaomi taking second.
Apple Watch Sales Surge
Just five months ago, many people were questioning (if not writing off) the Apple Watch. The new Series 2 had just been released, but in December IDC released a report saying Apple Watch declined by more than 71%. The research firm noted Apple’s chances for success would be “muted” as smartwatches continued to be challenged by strong wearable sales.
While AAPL supposedly struggled, Fitbiit sales increased, continuing to add to Fitbit’s lead atop the wearables market. Apple vehemently denied IDC’s claims, with Apple CEO Tim Cook issuing a rare personal statement claiming Apple Watch sales growth was “off the charts.”
According to Strategy Analytics’s Q1 2017 report on wearables sales, Cook was right.
Its numbers say Apple Watch sales rose 59% year-over-year, with 3.5 million units shipped compared to 2.2 million in Q1 2016. Overall, AAPL took 15.9% of the global wearables market — which was itself up 21% annually — overtaking Fitbit to become the world’s number one wearables vendor.
This feat is especially impressive when you consider the fact that the cheapest Apple Watch (the two year-old 38mm Series 1) starts at $269, while Fitbit wearables start at under $100 and Xiaomi’s Mi Band is priced at $13.
Fitbit can’t just blame stellar Apple Watch sales. A big part of the shift in leadership was a stumble by Fitbit.
FIT stock may have rallied, but according to Strategy Analytics’s numbers, the company’s sales tanked badly in the first quarter. Sales of its fitness trackers and Blaze smartwatch fell 36% compared to 2016, to 2.9 million units. Had it been able to even stay flat at Q1 2016’s 4.5 million units, Fitbit would have remained on top.
However, with that poor performance, it not only lost the crown to Apple, but Xiaomi — which also saw its sales drop — managed to still move enough units to slip into second place with 3.4 million units sold.
Strategy Analytics had this to say about Fitbit’s performance:
“Fitbit has lost its wearables leadership to Apple, due to slowing demand for its fitnessbands and a late entry to the emerging smartwatch market. Fitbit’s shipments, revenue, pricing and profit are all shrinking at the moment and the company has a major fight on its hands to recover this year.”
Taking the overall wearables crown was a coup for AAPL. Its domination of the smartwatch category is one thing, but with many questions being raised about whether there is actually a long term market for big, expensive, powerful smartwatches, having Apple Watch sales blow past those of fitness wearables is vindication.
At least temporarily; these numbers are just for one quarter.
It’s important to note that Strategy Analytics’ numbers for Apple Watch sales are estimates. AAPL doesn’t spike out actual numbers in its earnings reports. It’s also important to know that Fitbit isn’t taking this sitting down, and images and specs for a new Fitbit “Project Higgs” smartwatch have leaked. And you don’t hear much about them these days, but there are still smartwatch competitors running Alphabet Inc’s (NASDAQ:GOOGL) Android Wear trying to claw their way into contention.
But for now, AAPL can enjoy the spotlight with Apple Watch sales up and topping both the smartwatch and overall wearables sales charts.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.