Apple AAPL is dominating the wearables market, courtesy of Apple Watch. The company’s focus on health features like ECG and fall detection in the Apple Watch Series 4 has been a game changer.
Moreover, on Jun 23, the iPhone-maker previewed watchOS 7 at its first-ever virtual Worldwide Developers Conference (WWDC), delivering enhanced customization tools and new health and fitness features including sleep tracking, automatic handwashing detection, additional workout types including dance, and a new hearing health feature expanding insight into overall user well-being.
Moreover, the solid adoption of Apple Watch Series 5, has helped the iPhone maker strengthen its presence in the personal health monitor space. Notably, the smartwatch is based on watchOS 6, which comes with additional healthcare and fitness features like Cycle Tracking, the Noise app and Activity Trends.
This Zacks Rank #3 (Hold) company’s wide array of healthcare offerings in watchOS makes it a key differentiator in the wearables space. The device is expected to become major a growth driver in the long haul. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Apple Watch Dominates Market Despite Coronavirus Impact
The spread of coronavirus has affected the supply chain of smart and basic watches. Nevertheless, per the latest data from Strategy Analytics, cited by TechCrunch, in first-quarter 2020, global smartwatch shipments grew 20% year over year to reach 13.7 million units.
Apple shipped 7.6 million smartwatches, up 23% year over year. The company leads the market with 55% global market share, followed by Samsung and Garmin GRMN with 14% and 8%, respectively.
A few vendors managed healthy growth driven by online sales and lesser reliance on markets in China and further expansion into the United States, Europe, and other parts of Asia.
Wearables Growth Potential Aplenty
The demand for wearables, particularly smartwatches and ear-worn (earwear as defined by IDC) devices, is expected to remain strong in 2021. Global shipments of wearables grew 29.7% year over year to 72.6 million in the first quarter of 2020.
Earwear shipments accounted for 54.9% of the market and grew 68.3% year over year, followed by Wristband that grew 16.2% during the same period.
Per Gartner’s projections, global user spending on wearable devices will increase 22% year over year to $63 billion in 2021. Moreover, according to Mordor Intelligence, the smart wearables market is anticipated to witness CAGR of 19.1% over the 2019-2024 timeframe.
Fitness bands are also gaining rapid adoption due to improving capabilities driven by the infusion of AI, ML and IoT technologies. Apple, Fitbit FIT and Jawbone are key beneficiaries of this trend.
Year to Date Performance
Other Players in the Fray
The loss of key features like blood oxygen monitoring system and heart rate detection through the light emitters due to various lawsuits could hurt Apple’s competitive position in the wearables market against the likes of Amazon AMZN, Fitbit, Garmin, and Samsung in the long run.
Alphabet GOOGL is expected to emerge as the biggest challenger, primarily due to the Fitbit acquisition. The integration of Fitbit devices — activity trackers, smartwatches, wireless headphones, smart scales — will expand Alphabet’s technological platform (Android, smartphone, chromecast, smart display, Nest devices).
Its Google division is also gaining traction in this particular space with its Wear OS operating system, which can be synchronized with Google Fit and other health apps.
Moreover, this Zacks Rank #3 company’s focus on infusing advanced AI and ML technologies into its platform is a key catalyst. Further, the addition of technologies (via acquisitions & partnerships) from Pebble, Misfit and Fossil is expected to provide Alphabet a competitive edge over Apple.
Notably, Charge 4, released in April, is Fitbit’s first tracker after the company was acquired by Google. The latest and advanced fitness tracker comes with GPS and allows users to subscribe to music streaming apps like Spotify. This also includes features from Fitbit Charge 3 that enable better healthcare management with its advanced 24/7 PurePulse heart rate technology and SpO2 sensor.
Additionally, the Zacks Rank #3 company’s Versa 2 is equipped with smart sleep features like Sleep Score, Smart wake, Sleep Mode and estimated oxygen variation graph, and other advanced health, fitness and smart features.
Meanwhile, Garmin’s solid portfolio of smartwatches include vivoactive 4 and 4S GPS, which feature advanced sleep tracking , respiration tracking, Body Battery energy monitoring, women cycle tracking, stress tracking with relax reminders and hydration tracking. These watches also provide abnormal heartrate alerts.
Additionally, the company also introduced vivomove 3/3S, vivomove Style and vivomove Luxe, which are well-equipped with health wellness features.
Further, this Zacks Rank #3 company introduced a GPS smartwatch with AMOLED screen named Venu that provides valuable health insights and is capable of 24/7 health monitoring.
In a bid to fight the coronavirus, Amazon recently deployed clear plastic-sleeve shaped like gadgets that give off warning signals when workers violate social-distancing mandate.
Samsung is also rapidly penetrating the fitness tracking smartwatch space with its expanding family of Galaxy Watch. Samsung shipped 1.9 million smartwatches in the first quarter of 2020 even as its market share went down from 15% to 14%. Samsung’s smartwatch growth was slowed by the coronavirus lockdown in South Korea and new competition from rivals like Garmin.
Diverse initiatives by the abovementioned companies are intensifying competition in this space.
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