Fitbit Market Share Plunges

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New research shows that while consumer electronics firms in the wearable device market mostly did well in the second quarter, Fitbit Inc.’s (NYSE: FIT) market share plunged.

According to new research from IDC, Fitbit’s global market share dropped from 24.1% in the second quarter of 2016 to 12.9% in the same period of this year. This puts it third worldwide in shipments in the quarter, behind Xiaomi, which had a market share of 14.3%, and Apple Inc. (NASDAQ: AAPL) at 13.0%.

In summary:

The worldwide wearables market was once again graced with positive growth as shipments grew 10.3% year over year, reaching 26.3 million during the second quarter of 2017 (2Q17), according to the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker. The quarter also marked a turning point in the market as basic wearables (those that do not run third party apps) declined for the first time with annual growth of -0.9%. Meanwhile, smartwatches like the Apple Watch and Android Wear lineup grew 60.9% in the quarter thanks to fitness and fashion enthusiasts.

Fitbit shipped 3.4 million units in the period, as did Apple. Xiaomi shipped 3.5 million. In fourth place, Garmin shipped 1.4 million.

IDC’s comments about Fitbit’s prospects:

Fitbit finds itself in a period of transition. Early leaks and the recent official announcement of the Fitbit Ionic will help cement the company’s place in the growing smartwatch market. However, short-term growth remains challenged as the product portfolio is vast and undifferentiated.

Fitbit’s shareholders have taken the brunt of the company’s poor results against the competition. Its shares trade at $6, in a 52-week range of $17.18 to $4.90.

Fitbit’s near-term prospects hang on a new product. Late last month the company released:

… its first smartwatch – Fitbit Ionic™. A health and fitness first platform, Ionic offers a highly personalized experience not previously seen in other smartwatches. Ionic builds on Fitbit’s health and fitness expertise with a new relative SpO2 sensor, making it possible to track deeper health insights like sleep apnea in the future, industry-leading GPS tracking, on-device dynamic workouts, improved heart rate tracking, and water resistance up to 50 meters.

While many analysts are sanguine about the product’s future, the company is up against some of the largest consumer electronics firms in the world. Fitbit has a high bar to clear if it wants to regain lost market share.