Report: Apple and Fitbit Dominate Wearable Market

As a part of a broader report I’m developing for my company’s clients both in the tech and financial industries, I’ve been modeling our views on what happens in wearables for the next few years. I will break out smart watch shipment estimates and health and fitness devices separately, although each category is intertwined in the wearables category. Taking a step back and looking at the macro view of the wearable market up until the launch of the Apple Watch, Fitbit was the dominant vendor in terms of unit shipments. Fitbit’s share of the health and fitness tracker wearable market was just over 70% in 2014 and over 50% of the total wearable market shipments even when smart watches are included. However, the problems with the current health and fitness market loom and must be solved for us to continue to believe in the upside of dedicated health and fitness trackers.

To put our view of wearables for the next few years into perspective, I’ve mapped them among our forecasts for other primary computing devices.

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As you can imagine, doing a forecast like this for something unknown like the wearables category is tricky. It is loaded with assumptions which we build into our reports for clients. I typically like to create a bull-base-bear scenario for each forecast outlining things to watch for which may signal the way the market is heading. But for now, we will operate on the assumption the wearables category will continue to gain interest globally. However, I do feel the next few years will signal more of a shift toward smart watches or perhaps smarter, more capable health and fitness bands than the basic health and fitness wearables which make up most of the market to this point. I’ve charted that shift here.

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Apple’s entrance to the category has contributed and will continue to contribute to a massive YoY growth spike for smart watches in 2015. We continue to see year-over-year growth in smart watches, more so than health and fitness bands, largely driven by the Apple Watch over the next few years. Where we do see some upside, and it is reflected in our forecasts, is in basic health and fitness bands, including ones with more sophisticated health sensors, that are starting to be adopted by doctors and health insurance companies and prescribed to patients with specific health conditions. This class of product would be purpose built as to pass the required regulations to be used and integrated into a health provider’s services.

Apple vs. Fitbit

I’m sharing a chart from my proprietary model of sales estimate and forecasts by specific vendors. I do ask our readers keep this chart private and don’t re-post it to the web for free. I build these models for investment firms and they are quite valuable. I have this model built out through 2016 but, as to not give too much of that away, I’m showing and will walk you through my estimate only through 2014.

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My initial estimates for Apple Watch sales appear to be tracking for both calendar 2015 and a full year of product availability. I’m still confident in our estimate of 19m Apple Watches in fiscal 2015 sold and the momentum is gaining toward the back half of the year as evidenced in our primary research of buyer intent. Supply chain sources continue to validate shipment momentum and, knowing Apple’s retail inventory tactics, it can only mean, as supply is catching up with demand, sell though remains in line with supply chain output volumes we are tracking.

As you can see from our estimates, the wearable market is a two horse race between Fitbit and Apple. While Xiaomi, with their low-cost MiBand, has come to the party and taken share, it still remains relatively low compared to Apple and Fitbit. We expect Xiaomi to stay committed to this category and hear other wearable products are in the pipeline.

I believe Fitbit will still carry some momentum and Apple Watch’s presence is what we believe will help Fitbit continue that momentum. Our buyer intent surveys around wearables have seen a dramatic increase in interest both in intent and consideration for the category since Apple’s entrance. This backs up many analysts views that the Apple Watch will help float all boats in the category. However, our surveys indicate it may help float FitBit’s boat more so than other wearable products and we don’t know yet for how long. FitBit has higher brand awareness than any other wearable–other than the Apple Watch–and the money they raised with their IPO should help them spend on marketing, IP, and future products. I have a bear case for Fitbit that keeps them competitive a while longer. These are the base assumptions being used to forecast Fitbit’s model through the end of the year and into 2016. This holiday season, both the Apple Watch and Fitbit products will likely see the strong seasonal bump the category saw in Q4 2014. This Q4 2015 is likely to see a much larger spike, thanks to the Apple Watch.

Where the Apple Watch will really outpace Fitbit is in their China momentum. As I outlined in my China smart phone report, Apple is becoming a genuine force to be reckoned with in China. While we surveyed the landscape in many markets, it was China that had over 20% of respondents who claimed a strong intent or a definite plan to buy the Apple Watch. China’s iPhone installed base is near that of the United States with nearly 100m units in active use (the US is over 110m units now). With such a strong and growing base of iPhone 5s (the single most owned iPhone in both China and US) and above, the China market is a hot zone for the Apple Watch.

Microsoft is the dark horse to watch. Right now, our estimates are the Microsoft Band has less than 10% market share of the health and fitness market, but they are only on version one of their product. If version 2.0 is much improved, it could help Microsoft grab market share, likely impacting FitBit, in the health and fitness wearable market.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

6 thoughts on “Report: Apple and Fitbit Dominate Wearable Market”

  1. Looks like your assuming ~ 60M smartwatches in 2017

    Do you have an estimate for Apple’s share of that?

  2. What I find very interesting about your second graph is that excluding the “other” line, the vast majority of non-Apple wearables (Fitbit, Xiaomi, Garmin, Jawbone) are fitness trackers. This is true even in your projections for the later half of 2015, which suggests that you do not see Apple Watch significantly floating the boats for Samsung Gear (Tizen) or Android Wear devices, despite Apple Watch not being a dedicated fitness tracker.

    So, just to clarify, is it true that you are seeing Apple Watch float the boats for the fitness tracker segment, but not for the more fully-featured, Android Wear type of smartwatch?

    1. Correct. I’m looking forward to when we have our private discussion forum so I can share additional research, and thinking, privately with subsribers.

      1. That’s a bit startling and surely disappointing for the OEMs, but at the same time, it reminds me of when the iPad came out and the Android OEMs were struggling to find a price zone that would be low enough to lure customers. They initially aimed for feature and price parity with the iPad, but since none of the attempts worked, they were forced to try out radically lower prices and different screen sizes (under $200, Amazon Fire and Nexus 7).

        Android Wear already has a variety of sub $200 Android Wear devices ( on Amazon at least ), so it will be interesting to see if the OEMs try to go, for example, below $100, in search of a price that customers will pay.

  3. Very interesting figures there Ben.

    One question about your China stat: what is the 20% referring to exactly? 20% of iPhone owners?

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