The evolution of wearables has resulted in a surge of interest from consumers in recent years, and this year is set to be the biggest yet. Global shipments of wearable devices soared to 84.5 million units in the third quarter of 2019, growing 95% year over year, a strong acceleration from the 29% increase in Q2 and 55% growth in Q1. This resulted in a record number of shipments in a single quarter, according to new data released by International Data Corp. (IDC).
Ear-worn wearables, or hearables (which include wireless headphones and earbuds), drove the majority of the demand, accounting for nearly half the market in the third quarter. They were followed by wristbands and smartwatches, according to IDC.
As impressive as the overall growth was, the performance of Apple (AAPL +1.08%) was even better.
Apple's AirPods Pro in their carrying case. Image source: Apple.
Leading the pack
Apple took the top spot in wearables with 29.5 million units shipped, up 196% year over year. The report cited the growing popularity of the Apple Watch, AirPods, and Beats headphones as driving the shipment increases. The company captured 35% of the market, according to IDC, more than double its 15% share in the second quarter.
Xiaomi took the second spot with 12 million units shipped and 15% of the market. Apple had ceded its crown to the Chinese smartphone company in the second quarter, but recaptured the lead with the release of its second-generation wireless AirPods earlier this year and the recent debut of the AirPods Pro -- which have been a hot-ticket item this holiday season.
"Hearables have become the new go-to product for the wearables market," said Ramon T. Llamas, research director for IDC's wearables team. "This began with multiple vendors removing the headphone jack from their smartphones, driving the move toward wireless headphones." Llamas noted that the introduction of additional features and a variety of new form factors and price points have helped drive significant adoption.
Growing importance
Wearables have been an area of growing importance to Apple, as worldwide shipments of smartphones have leveled off or declined in recent years. Even as sales of other products and services have increased, the iPhone still represents more than half of Apple's revenue, causing the company to look elsewhere to boost its growth. While the services segment has been getting most of the headlines, wearables are also doing some of the heavy lifting.
For Apple's fiscal fourth-quarter (which ended Sept. 28), wearables had a record quarter "in each and every market we track" and generated "well over 50% growth," according to CEO Tim Cook. With the accelerating sales -- particularly of AirPods -- among holiday shoppers, there's every likelihood that Apple could score even more market share gains going into the end of the year. In its report, IDC indicated as much, saying, "The price reduction on the Series 3 Watch, as well as the launch of AirPods Pro, leaves Apple in a strong position to maintain dominance in this market for the short term."
A peek behind the curtain
The tech giant hasn't broken out just how much its wearables business is worth, so it's difficult to accurately gauge the impact of this sub-category on Apple. To give it some context, however, the wearables, home, and accessories segment grew to $6.52 billion, up 65% year over year during the fourth quarter. That wasn't an anomaly, either, as the segment soared 71% during fiscal 2019 to $24.4 billion, accounting for 9.4% of the company's total sales.
Apple has an installed base of about 1 billion iPhones, providing a significant market for these add-on devices. The company has shown time and again that it can innovate and push boundaries that will keep its loyal users coming back to the well -- rewarding Apple investors in the process.
