A Foolish Take: Apple Loses the Wearables Crown to a Chinese Challenger

MarketsMotley Fool

Apple (NASDAQ: AAPL) dethroned Fitbit (NYSE: FIT) to become the world's top wearables maker in the fourth quarter of 2017, according to IDC. Apple retained the title during the first two quarters of 2018, but it lost the crown to Chinese tech giant Xiaomi (NASDAQOTH: XIACF) in Q3.

Xiaomi's shipments surged 91% annually to 6.9 million, fueled by robust demand for its Mi Band 3. The basic fitness tracker, which costs about $30 and can track a user's heart rate and steps, helped Xiaomi gain ground in India, Europe, the Middle East, and Africa.

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Apple's market share fell, but its shipments jumped 54% to 4.2 million. The cheaper Apple Watch Series 3 attracted budget-conscious consumers, while higher-end customers purchased the new Series 4. Apple's growth isn't as impressive as Xiaomi's, but it mostly serves iPhone owners, while Xiaomi targets Android users.

Yet Xiaomi could be hurting Fitbit, which saw its shipments fall 3% to 3.5 million. Fitbit offset softer demand for its basic fitness trackers with sales of the Versa smartwatch, the Charge 3 fitness tracker, and its Ace fitness tracker for kids, but it still lagged Xiaomi and Apple in terms of market share.

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Leo Sun owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Fitbit. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.