That’s according to Strategy Analytics, which found that during the second quarter, global shipments of wearable devices reached 22 million units, up 8% year-over-year (YOY) with Xiaomi controlling a 17% market share. That was enough to overtake both Fitbit and Apple to become the world’s largest manufacturer of wearable devices. In the second quarter of 2016, the industry shipped 20 million wearables.
“Xiaomi’s Mi Band fitness trackers are wildly popular in China, due to their highly competitive pricing and rich features such as heart-rate monitors, step-counters and calendar alerts,” wrote Neil Mawston, executive director at Strategy Analytics, in a recent report. “Fitbit is at risk of being trapped in a pincer movement between the low-end fitness bands sold by Xiaomi and the fitness-led, high-end smartwatches sold by Apple.” (See also: Intel Gives Up on Wearables.)
Apple's Next Move
According to the research firm, during the second quarter, Xiaomi shipped 3.7 million wearables, up 23% from a year ago’s shipments of 3 million. Meanwhile, Fitbit shipped 3.4 million wearables coming in second place with 16% market share and Apple shipped 2.8 million wearables. “Apple has for now lost its wearables leadership to Xiaomi, due to a lack of presence in the sizeable fitness band subcategory,” said Cliff Raskind, director at Strategy Analytics, in the same report. “However, the rumored upcoming Watch Series 3 launch with enhanced health tracking could prove to be a popular smartwatch model and enable Apple to reclaim the top wearables spot later this year.” In addition to improved health tracking, Bloomberg reported last week Apple is gearing up to launch a version of its Apple Watch that can make phones calls by connecting directly to cellular networks. Its slated for release later this year. (See also: Fitbit's Smartwatch Project Is in Turmoil: Report.)
While losing out to Xiaomi is a blow to both wearable device makers, Fitbit stands to lose the most given it has been struggling all year to reinvent itself amid lackluster sales. Earlier this summer the stock took a hit after Wall Street firm Dougherty & Co. said there has been a steep decline in interest for the company’s products. Basing the assessment of Google search trends analyst Charles Anderson said interest has been waning over the last year although results in May were a “little less bad” than they were in April. The analyst said at the time searches on “activity trackers” were down 22% YOY in May compared to a 28% decline in April. In particular, Fitbit saw searches sink 30% in the U.S. and 17% globally. The results reflect a minor comeback from April, wherein search activity declined 35% in American and 27% globally.