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Upside for Smart Wearable Bands and Software Apps

Both basic and smart wearable bands are an emerging high growth market. A total of 2.7 million wearable bands shipped worldwide in Q1 2014, according to the latest market study by Canalys. Fitbit maintained its leadership position with nearly 50 percent market share.

Fitbit continued to ship most of the units in the basic band segment. Jawbone, another basic band competitor, also grew rapidly as it expanded its international distribution after the initial launch of the UP24 in Q4. Nike’s share of basic band shipments, however, dropped to 10 percent.

"The Nike+ FuelBand has frankly been outmatched on sales," said Daniel Matte, analyst at Canalys. "Its competitors’ speed, international reach, broader channel distribution, integration with other fitness communities, superior web sites and multi-platform support have proven to be major advantages."

Though Nike has been reported to be canceling future FuelBand products, the company’s focus is now on making use of its fitness software and Nike+ community of over 30 million users to promote its thousands of apparel products.

Canalys expects Nike's software to extend to Apple's upcoming smart band, which will likely be announced in the second half of this year. Besides, market shares in the smart band segment continue to change frequently as new products are released, and will continue to do so throughout 2014.

Pebble Technology launched the Pebble Steel and the Pebble app store and grew at a healthy rate during Q1, managing to achieve smart band market leadership for the quarter with a 35 percent share of worldwide shipments, ahead of both Sony and Samsung.

Canalys quarterly estimates showed that total smart band shipments fell short of half a million units. This is largely because Samsung's shipments were down dramatically quarter on quarter as it had strong sell-in for Q4 and then cleared inventory in preparation for its Gear product refresh in early Q2. The company must make some big steps to improve sell-through and customer satisfaction with its new products.

Some industry observers are wondering if the wearables market is a failure, but Canalys believes the current dynamics instead reflect the rapidly changing nature of wearable devices. More sophisticated sensor technology designed specifically for wearables will be arriving soon.

New devices running Android Wear will launch this summer from LG and other vendors, such as Motorola, which is now poised to re-enter the smart band market after exiting it two years ago.

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