A high inventory situation led to a decline in smartwatch shipments for the first time since Q4 2018, falling by 7.3% on-year to 9.6 million units, resulting in the share of smartwatches within the wearables segment dropping from 37.6% from 41.4% a year ago.
Despite the average selling price (ASP) falling by 17.8% during the quarter, the growth was restricted on account of high inventory carried over from the festive season in 2023, research firm IDC said in a report Wednesday.
The firm said ASPs reached a record low in the March quarter to $18.59 from $22.62 in the previous quarter.
“Excess inventory in the online channel and fewer new launches led to this decline. Smartwatch ASPs dropped to $20.65 from $29.24 a year ago on the back of e-tailer sales events and discounts,” IDC said, adding that the share of advanced smartwatches (that includes the Apple Watch and Google Wear OS watches) increased from 2% to 3.2% in Q1 2024.
“The smartwatch market is showing early signs of a slowdown in India. The vendors are facing challenges in luring customers to upgrade due to limited innovation and freshness in newer models,” Vikas Sharma, senior market analyst, smart wearable devices, IDC India, said.The earwear category, though, grew by 8.3% on-year, shipping 15.9 million units with the share of truly wireless earbuds reaching 70.1% from 63.8% a year ago, reflecting a growth of 19% on-year. The period saw ASPs for ear wear also decline by 7.3% on-year to $16.62.“IDC expects a low double-digit annual shipment decline for smartwatches in 2024. At the same time, earwear shipments are expected to grow by mid-single digit, driven by AI capabilities and affordable yet advanced features like active noise cancellation options,” Sharma said.
Similar to the smartphone market, the wearables market too is seeing increased competition from smaller brands. The top five brands — Boat, Noise, Fire-Bolt, Boult and Oppo, saw their ranking unchanged from a year ago, but their collective share declined from 63.9% to 59.9% at the cost of long-tail brands gaining share. Smaller brands like Titan and BeatXP grew 2x and 3x respectively, IDC Said, while shipments of the top three brands declined due to high channel inventory.
The report also noted a shift in channel dynamics with brands now focusing on retail expansion through partnerships with large format retail chains, along with bundling wearables with smartphones, laptops and other high-ticket purchases. The share of offline channels in the wearable segment increased to 37.9% in Q1 2024 from 26.1% a year ago, while online channel shipments declined by 14.1% on-year, marking its second consecutive quarter of decline.
“It will be interesting to see if these initiatives help bring back the growth momentum, especially in the festive sales period in the second half of the year,” said Anand Priya Singh, market analyst, smart wearable devices, IDC India.
Wearable brands are also focusing on smart rings, an emerging category, in a bid to premiumise. “The momentum for the smart ring category continues, with 64,000 smart rings shipping in Q1 2024 at an ASP of $173.06,” IDC said, noting that Ultrahuman continued to lead the smart ring segment with a 43.9% share.
