A little known Chinese-based manufacturer has broken into the wearables top five, according to new data from IDC. What was so significant about this company that it was able to push ahead of a much larger company? How should we be thinking about the numbers being reported in this industry? Tune in to find out.
Listen to the full podcast by clicking here. A transcript follows the video.
This podcast was recorded on Dec. 4, 2015.
Vincent Shen: Can you tell us a little bit about these results that came out from IDC?
Dylan Lewis: Yeah. So IDC releases wearable shipment volume data on a quarterly basis and so earlier this week they released their most recent installment of that. No huge surprises here in terms of what the landscape looks like. It pretty much mirrors what we saw last time in terms of the top of the market share.
So Fitbit (FIT +0.00%) came in with 4.7 million shipment volumes, Apple (AAPL +1.18%) was second with 3.9 million shipments, Xiaomi in third with 3.7, and just to give you an idea of what that means in terms of the larger market, we saw about 21 million shipments. So the respective market share as a percentage for those three top players: 22%, 18% and roughly 17.5%.
Shen: OK, OK. And where have you seen, where did we see some of the biggest shifts? I know that the Apple Watch came out I believe it was April of this year, so that kind of threw things a bit with a lot of new buyers coming into the market for the second quarter. And it looks to me like Xiaomi also had a really big boost for at least year-over-year for this most recent period.
Lewis: Yeah I think the tough thing when you look at this IDC data is, you know the wearables market is so nascent and there have been these weird hop-ins from major players at different times. So a lot of the data is really lumpy and you can't look. It's really kind of meaningless on a year-over-year basis or even sometimes on a sequential basis as we'll find out. Because the landscape has changed so dramatically in the course of even like three months' time or six months' time. So if you want year-over-year growth for what it's worth just look at what the regular, the whole market looks like.
Q3 2014 saw 7.1 million shipments, again 21 million shipments in this most recent quarter, so that's good for almost 200% increase in total market size. Sequentially we saw 16% growth. Q2 had 18.1 million shipments. So that might be a little disappointing when you think about the Q1 to Q2 growth which was almost 60% sequentially. And this kind of plays into that lumpiness I was talking about a little bit.
So again the Apple Watch came out in Q2 and that was a product that added like 3.5, 3.6 million shipments to the category. And I think another thing that's important to keep in mind here is this is the quarter right before the big holiday sales rush. And so I wouldn't be totally surprised and maybe this is something you can add a little color on and you know you talk CG a little bit more. But I'm guessing there are some folks out there that have something like this on their wish list, or are thinking about buying it for someone else, but are going to wait until either the sales that come with Black Friday season Cyber Monday season or you know are just looking to wait just to give it as a holiday gift in general.
Shen: That is actually something I saw. There's definitely been some echoes that Apple will prove to be a big winner, I guess as usual for the, at least the Black Friday Cyber Monday period. Where their iPads and their Apple Watch saw a lot of buy-in especially with the, just a little discount that they need. I think it was like $50 off for example with Apple Watch to get people at the level where they would be willing to try it out.
They also launched like some native apps for the device which I think have got people a little more excited about it too. So it's definitely, I definitely think the Apple Watch was a hot item for the Black Friday period.
Lewis: Yeah. And looking at some of the other company-specific takeaways from this data release. You know, we talked about some of the big names. I think, you know, so Garmin kind of held constant at it being slightly relevant in the space. But not like really worth talking about all that much.
But I think the biggest surprise is the player that came in at number five which is new to a lot of people, is Chinese manufacturer XTC which is owned by BBK and they displaced Samsung (NASDAQOTH: SSNLF) to be the fifth-largest wearable shipper in the most recent quarter. And I think the last time we did this check-in on this quarterly data about three months ago, we said Samsung was one of the biggest losers because you look at some of the big tech companies out there and they're owning the space.
Apple's coming in and immediately becoming the second biggest player. Samsung has been around for quite a while with products and hasn't really seemed to make it work. And they are losing market share to these tiny players that are just establishing themselves. And you think of the resources that are available to a big tech company like that, and you have to think, "What's going on over there?"
Shen: Yeah, really the surprising thing for me too that when you mentioned with BBK's, they grabbed up that market share and was able to displace Samsung. It sounded like it was just from one device that they have that kind of targets younger consumers. So I thought that was really interesting.
