While Apple's (NASDAQ: AAPL) newest Apple Watch Series 4 garnered all sorts of critical acclaim, the latest and greatest version doesn't appear to be dominating sales in the way that you might expect. In fact, the Series 4 represented less than 20% of Apple's wearable shipments during the quarter, according to the latest estimates from market researcher IDC. However, that's actually incredibly impressive when you consider that the Series 4 didn't launch until Sept. 21, with just over a week left in the quarter.
In other words, Series 4 grabbed almost 20% of unit volumes with just 10 full selling days out of the third quarter.
Basic trackers are bouncing back...for now
With that timeline in mind, it should come as no surprise that Apple Watch Series 3 "accounted for the majority of Apple's shipments during the quarter," according to IDC. The Series 3 saw its price drop to $279 for a starting GPS model following the introduction of Series 4, and that also helped the iPhone maker boost Apple Watch unit volumes. The previous-generation model, which was the first to include cellular connectivity, is still very competitive against other wearables.
IDC's estimates include the broader wearables market, which jumped a solid 21.7%. While the market has generally been shifting away from basic trackers toward multipurpose smartwatches, basic trackers enjoyed something of a resurgence in the third quarter thanks to a slew of new product introductions, according to IDC. Xiaomi was able to reclaim its crown from Apple following the launch of the Mi Band 3 after the Mac maker spent two quarters as the No. 1 wearables producer.
Elsewhere, Fitbit (NYSE: FIT) is now mounting a profitable turnaround with its latest products, most notably the Versa.
Fitbit is rightly proud that it is the No. 2 vendor in the smartwatch market (excluding basic trackers). IDC notes that the latest gadgets, which in addition to the Versa include the Charge 3 and Ace, have helped the company stem its declines, and it expects Fitbit to maintain its position as the No. 2 smartwatch seller.
Basic trackers are still popular in emerging markets, which helped the subcategory return to growth in the third quarter. Remarkably, the U.S. market is already in the process of transitioning from new adopters to replacement purchases, even though the market is still relatively young compared to other computing form factors.
Healthcare is also poised to become the primary differentiating smartwatch battleground for Apple and Fitbit going forward, in IDC's view. Both companies are aggressively building out digital health platforms, and regulation will inevitably serve as a strong barrier to entry. Don't expect the basic tracker bounce to last, though. As smartwatch prices continue to come down, the temptation for basic tracker users to switch to full-featured smartwatches may prove irresistible, leading to an increasing number of users moving upmarket, IDC says.
Find out why Apple is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. (In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the market!*)
Tom and David just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
*Stock Advisor returns as of November 14, 2018
Evan Niu, CFA 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.