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UA’s Entry into the Wearables Market Opens Up New Markets

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Other wearable product releases

Besides smart footwear, Under Armour (UA) also unveiled other fitness trackers and wearable products at the Consumer Electronics Show in Las Vegas, including:

  • UA Headphones Wireless and UA Headphones Wireless Heart Rate, in collaboration with Harman (HAR)
  • UA Band, a fitness tracker, retailing for $180
  • UA Heart Rate, a heart monitor designed to provide relief during workouts, retailing for $80
  • Wi-Fi and Bluetooth-enabled UA Scale, a weight and body fat monitoring scale, retailing for $180
  • UA HealthBox, including the complete system UA Band, UA Heart Rate, and UA Scale, retailing for $400, the result of a collaboration between UA and HTC

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Wearables market

According to the International Data Corporation and Statista, Fitbit (FIT) was the leader in the wearables market in 3Q15, with 4.7 million shipments, more than double the 2.3 million clocked in 3Q14.

Apple’s iWatch (AAPL) also managed to capture a large section of the market, with 3.9 million shipments in 3Q15, its first year. Xiaomi’s Mi Band was third with 3.7 million shipments.

Nike’s (NKE) fitness tracker, the Nike Fuel Band, was discontinued a few years ago. However, Apple’s iWatch features the Nike+ Fuel app. Adidas’ miCoach (ADDYY) range of products also provides several fitness trackers.

Outlook

Although these launches won’t have affected Under Armour’s 4Q15 results, they’re likely to spur future sales (FXD) for its products. They’re a cross-selling opportunity for UA. They’re also likely to open up new markets for the company.

The sale of wearables may also lead to higher future advertising, services and licensing, and hardware revenue, making it a segment worth watching.

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