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Apple and Fitbit: Avoiding the Dip in the Wearables Market

By Kristen Hanich, December 26, 2016

It's no secret—the wearables market isn't doing as well as it should be right now. According to Parks Associates' estimates, the leading smart watch—the Apple Watch—experienced a YoY sales decline of ~53% in Q3 2016. Even with the Q4 release of the Apple Watch Series 2, Apple may be on track for moderate growth in 2016 relative to its 2015 debut. Compare this to Fitbit, the leading fitness tracker: as per Fitbit's SEC filings, its sales grew 21% YoY in the nine months ending October 1st.

So, why the difference between Apple and Fitbit?

One explanation is that consumers have yet to be convinced of the value of smart watches—after all, many of their non-fitness tracking functions can be done more quickly and easily on a smartphone. This may hinder new device adoption, but does not seem to be an issue among current owners. Parks Associates has actually seen higher engagement rates among smart watch owners than fitness tracker owners: owners of smart watches use their devices more regularly and abandon them less often than owners of fitness trackers.

Another explanation has to do with the way these companies are positioning themselves to partners. Fitbit began aggressively marketing its products to corporate clients and health insurers in 2014, an area Apple is just starting to tackle. These verticals are likely helping to generate additional demand, and may help to insulate Fitbit from the summer sales dip that other wearables makers encounter. This area is likely to grow: as the U.S. approaches full employment in a number of sectors, employers will need to compete more and more heavily for in-demand workers by differentiating themselves with high-quality employee benefits.

Want more info on the wearables market? Check out Parks Associates' Health 360 View Update: Quantifying the Quantified Self.

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Apple and Fitbit: Avoiding the Dip in the Wearables Market

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