If a $27 fitness band outsells a smartwatch costing several hundred dollars and with a vastly higher profit margin, has the fitness band truly won No.1?
Strategy Analytics has put out a report stating that Xiaomi was the “World’s No.1 Wearables Vendor in Q2 2017.”
This is a turnaround from Q1 2017, which saw Strategy Analytics analysing the numbers to put Apple Watch in the No.1 spot.
While the Xiaomi Mi Band 2 seems to retail for around A$50 to A$70, there’s one site seemingly selling it for A$26.40.
{loadposition alex08}As you can see from Xiaomi’s site, the Mi Band 2 does a lot of fitness things, and links with your Android or iOS device to track steps and heart rate, and alerts you to calls and texts like a Fitbit.
But it’s clearly no Apple Watch, nor is it even an Android Wear device.
So, while it has reportedly sold in large enough numbers to snag the Q2 2017 No.1 spot, what does it really mean?
An example lies with $100 Android phones and other low-end to mid-range models outselling iPhones on a global basis, and yet Apple leads with profits, with the best apps, with the most loyal developers who make the most.
Google gets its marketshare victory, but at what cost? Hundreds of millions of low-end devices that offer low memory, low storage and low, stuttery performance, even if they have large screens and seemingly high megapixel cameras. This is unlikely to make for happy customers.
The same goes with Apple Watch. In Australia, prices start at A$569 for a Series 2 watch in Aluminium. Price are cheaper for Series 1 models, and in US dollars, prices are cheaper still, while fitness bands are considerably cheaper, but are considerably less useful. Competitors might be outselling Apple, but at what cost to earnings, and customer satisfaction?
Nevertheless, Apple reportedly enjoys its usual great profit margin, which clearly helps the company fund future development, without which a company couldn’t continue existing before being overtaken by others.
So, with global wearables shipments reaching “22 million units in the second quarter of 2017” according to Strategy Analytics, we learn that “Xiaomi captured 17% marketshare and became the world’s largest wearables vendor for the first time ever, overtaking Fitbit and Apple".
The things is, Xiaomi’s fitness bands are not true smartwatches.
Even Fitbit has moved towards making a better smartwatch than its Blaze, but with Apple itself reportedly outselling well-known Swiss brands, and reporting a 50% year-on-year increase in Apple Watch sales, do you go for volume at what must be razor thin profits for Xiaomi, or do you go for Apple’s kind of volume, yet with great profits that help Apple deliver even better products for its customers year after year after year?
So, what do Strategy Analytics’ people have to say about Xiaomi’s Q2 'win'?
Steven Waltzer, industry analyst at Strategy Analytics, said, “Global wearables shipments reached 21.6 million units in Q2 2017, rising 8% annually from 20.0 million in Q2 2016. Strong demand for low-cost fitness bands in China and premium smartwatches across the United States drove the uptick.”
Neil Mawston, executive director at Strategy Analytics, said, “Xiaomi shipped 3.7 million wearables worldwide in Q2 2017, rising 23% annually from 3.0 million units in Q2 2016. Xiaomi captured 17% 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% marketshare worldwide in Q2 2017, almost halving from 29% 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,” continued Mawston.
Cliff Raskind, director at Strategy Analytics, said, “Apple shipped 2.8 million wearables worldwide in Q2 2017, growing 56% annually from 1.8 million in Q2 2016.
“Apple has for now lost its wearables leadership to Xiaomi, due to a lack of presence in the sizeable fitnessband subcategory. However, the rumoured 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.”
Indeed, one swallow does not a summer make, and one quarterly win does not guarantee Xiaomi can keep its no.1 position – so all eyes are firmly on the future, especially with the reports that Apple will place a 4G SIM card slot into its Watch Series 3 due "later this year".
Here’s the Strategy Analytics chart – article concludes below:
As you would expect, Strategy Analytics has a full report on the “Global Wearables Vendor Market Share by Region: Q2 2017,” which as always is available to relevant parties at relevant prices.
All I can say is, when it comes to comparing smartwatch apples with fitness band oranges, watch this space for the true results to come out, and as always, just because one company beats another on sheer numbers it does not make for a guaranteed winner. As always, time will tell!