China’s Xiaomi Passes Apple as Top Producer of Wearables

By Douglas A. McIntyre Updated Jan 12, 9:30AM EST · Published Aug 3, 6:25AM EDT

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Apple Inc. (NASDAQ: AAPL) smartwatch sales have not been enough to keep the American tech giant in the lead for global shipments of wearables. In the second quarter, the distinction as number one in the market went to China’s smartphone giant Xiaomi. As a matter of fact, Apple fell to third place behind FitBit Inc. (NYSE: FIT), which has struggled to increase revenue in recent months

According to research firm Strategy Analystics, wearable shipments reached 22 million in the second quarter of the year, up a very modest 8%. Most Xiaomi shipments were in its home market. Neil Mawston, executive director at Strategy Analytics, said:

Xiaomi shipped 3.7 million wearables worldwide in Q2 2017, rising 23 percent annually from 3.0 million units in Q2 2016. Xiaomi captured 17 percent global marketshare and overtook Fitbit and Apple to become the world’s largest wearables vendor. 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. Fitbit shipped 3.4 million wearables for 16 percent marketshare worldwide in Q2 2017, almost halving from 29 percent a year ago. Fitbit is at risk of being trapped in a pincer movement between the low-end fitnessbands sold by Xiaomi and the fitness-led, high-end smartwatches sold by Apple.

Apple shipped 2.8 million wearables and had a 13% share.

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Worries about FitBit have shown in its share price. The company’s stock trades at $5.07, down from a 52-week high of $17.18. Its sales dropped sharply in the second quarter, to $353 million from $586 million in the same period a year earlier. Analysts were encouraged that FitBit lost less than expected and selling new products would help holiday sales. Some observers still question whether it is a viable standalone company.

In one way, Apple’s numbers were encouraging. Its 2.8 million shipments in the second quarter were up from 1.8 million the year earlier. Apple continues to build a wearable that can generate the demand and market share of its smartphone and computer products.

The wearables market itself is in trouble. For a relatively new set of products, shipments have been extremely low worldwide. That means the market eventually may not be valuable to anyone.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.