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How Fitbit Could Feel the Recent Decline in Wearable Market Growth Rate

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Sep. 27 2017, Updated 12:06 p.m. ET

Shipments rose 10% YoY in 2Q17

Overall, wearable shipments rose only 10% YoY (year-over-year) in 2Q17 to 26.3 million units, up from 23.8 million units in 2Q16. This compares with shipment growth of 25% YoY in 2016 and 18% YoY in 1Q17.

Fitbit (FIT) had attributed its massive decline in device sales to saturation in developed markets such as the United States (SPY) and Australia. The company is now optimistic, however, that its new smartwatch, the Ionic, which has many new features, will again drive sales over the next few months.

According to market research firm IDC, customers are now shifting from traditional fitness trackers to devices loaded with several features. Last year, only 25% of wearable devices were embedded with GPS. This figure has now risen to almost 42%.

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Smartwatch to drive wearables market sales

In 2Q17, smartwatch sales experienced double-digit growth, and IDC attributed this growth to devices targeted at specific market segments available at different price points. Investors will be watching closely the device sales of Fitbit’s Ionic and the Apple Watch Series 3 to see how they perform during the holiday season of 2017.

IDC expects shipments in the wearables market to reach 125.5 million devices in 2017. This market is expected to grow at a CAGR (compound annual growth rate) of 18.2% between 2017 and 2021 and reach 240 million devices by the end of the predicted period.

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