Smartwatches are finally finding buyers and this is a bad news for fitness bands

It seems that fitness bands are out and smartwatches are in. Smartwatch shipments increased 25% year on year to more than 6 million. At the same time basic band shipments, mostly fitness bands, fell 7% year on year to just over 9 million in the first quarter of 2017.

The trend comes as users switch to smartwatches for greater functionality, according to a Canalys Research report. The smartwatch category now accounts for around 40% of the wearable band market, with growth largely driven by the Apple Watch, with its reinvigorated focus on health and fitness, it added.

Despite its high price, the Apple Watch gained the top spot in the wearable band category in Q1 2017, with 3.8 million units shipped worldwide and growth of 77%.

Basic bands or fitness bands shipments have declined by a large extent from over 15 million units in Q4 to 9 million in Q1 2017.

Source: Canalys

Canalys Analyst Jason Low said, “Water resistance, bluetooth music streaming and built-in GPS are becoming more relevant as runners and other fitness enthusiasts forgo the bulk of a smartphone. Just as we continue to see feature phone users upgrading to smartphones, basic band users find smartwatches to be a justifiable upgrade, because of their additional use cases. What sets the Apple Watch apart is a renewed focus on fitness, its co-branding with Nike helping to support this move. In addition, the availability of a wide range of accessories means the Apple Watch appeals to tech-savvy consumers with an eye for fashion.”

Apple’s success came at the expense of Fitbit, which suffered a 30% decline across its wearable band portfolio, shipping 2.9 million units, said the report.

“Despite the release of the Alta HR, pressure is mounting on Fitbit as anticipation grows for the follow-up to its Blaze smartwatch. Its new smartwatch will need a good reception if Fitbit is to turn its fortunes around and return to growth in 2017,” said Canalys Research Analyst Mo Jia.

“Even for vendors such as Xiaomi, which target entry-level price points, new fitness bands must show tangible user experience improvements, with stylish designs and long battery life, if they are to drive upgrades and encourage new purchases,” Jia said.

The importance of smartwatches will continue to grow as stickiness improves due to better sensors and battery life. “Hardware aside, user interface improvements and a growing ecosystem of applications and services will play a pivotal role in maintaining the momentum behind this relatively new category,” said Low.