India's Wearable Market Declines By 10% In Q2FY24: IDC Report

India's burgeoning wearable device market has experienced its first-ever contraction, according to the latest report from the International Data Corporation (IDC). The market, which had been on a steady growth trajectory, witnessed a year-on-year decline of 10.0 per cent in the second quarter of 2024, with total shipments falling to 29.5 million units.

Market Downturn
The first half of 2024 saw shipments dip by 4.7 per cent to 55.1 million units. This downturn has been attributed to cautious inventory management by vendors and efforts to clear existing stock ahead of the festive season. The average selling price (ASP) for wearables also reached a new low, decreasing by 10.3 per cent from USD 21.0 to USD 18.8 in Q2 2024.

Vikas Sharma, Senior Market Analyst for Smart Wearable Devices at IDC India, offered a cautiously optimistic outlook: "Several new model launches by incumbent brands are expected during the upcoming festive season which may help in arresting this decline. However, the annual shipments for smartwatches are expected to decline by 10 per cent in 2024."

Segment Performance
The smartwatch segment bore the brunt of the decline, with shipments plummeting by 27.4 per cent year-on-year to 9.3 million units. Its market share contracted from 39.0 per cent in Q2 2023 to 31.5 per cent. IDC reports that "Channel inventory, especially of previous generation models, and innovation exhaustion are restricting growth." The smartwatch ASP dropped to $20.6 from $25.6 a year ago "due to price cuts to clear inventory and discounts/offers by brands," according to the report.

In contrast, the earwear segment demonstrated resilience, managing a slight growth of 0.7 per cent year-on-year with 20.1 million units shipped. The Truly Wireless Stereo (TWS) category within earwear reached a record 71.0 per cent share, growing by 9.1 per cent year-on-year. However, other earwear categories, including tethered and over-ear models, experienced a decline of 16.1 per cent, shipping 5.8 million units.

Company Performance
The performance of leading companies in the wearable market showed mixed results:

boAt (Imagine Marketing) slightly increased its overall market share from 26.6 per cent in 2Q23 to 26.7 per cent in 2Q24, despite a 9.8 per cent year-on-year decline in shipments. Noise (Nexxbase) saw its market share drop from 13.5 per cent to 13.0 per cent, with a 13.9 per cent year-on-year decline.

Boult improved its market share from 6.6 per cent to 8.1 per cent, marking a 9.6 per cent growth. Fire-Boltt's market share fell from 9.5 per cent to 8.0 per cent, with a 24.3 per cent year-on-year decline. OPPO (including OnePlus) experienced a significant drop in market share from 10.7 per cent to 7.6 per cent, with a 35.8 per cent year-on-year decline.

In The Smartwatch Segment:
Noise (Nexxbase) maintained its leadership but saw its market share decrease from 27.6 per cent to 25.7 per cent, with a 32.4 per cent year-on-year decline.

Fire-Boltt's market share slightly increased from 23.8 per cent to 24.2 per cent, despite a 26.1 per cent year-on-year decline. boAt (Imagine Marketing) experienced a significant reduction in market share from 15.2 per cent to 11.6 per cent, with a 44.9 per cent year-on-year decline. Titan showed impressive growth, improving its market share from 3.4 per cent to 7.9 per cent, marking a 68.9 per cent increase.

In The TWS Market:
boAt (Imagine Marketing) maintained its leadership, with a slight decrease in market share from 35.3 per cent to 34.0 per cent, but still achieving 5.1 per cent growth.

Boult significantly improved its market share from 9.6 per cent to 12.9 per cent, marking a 47.1 per cent growth. Noise (Nexxbase) increased its market share from 6.6 per cent to 9.2 per cent, with a 52.0 per cent growth. Realme showed strong performance, increasing its market share from 4.0 per cent to 6.4 per cent, marking a 77.1 per cent growth.

Emerging Trends
Amidst the broader market contraction, new subcategories are emerging. The Open Wireless Solution/Open Ear Solution (OWS/OES) has gained traction within the earwear segment. IDC reports that “vendors like PTron (Palred), Truke (Eccentric Enterprises), and Noise (Nexxbase), have launched models in the affordable price segment, with Bose at the premium end.”

The smart ring category also showed promise, with over 72,000 units shipped in Q2 2024 at an ASP of $204.6. Ultrahuman dominated this segment with a 48.4 per cent market share, followed by Pi Ring at 27.5 per cent and Aabo at 10.5 per cent. IDC expects “the launch of more affordable smart rings by incumbent wearable brands during the upcoming festive season in the next few months.”

Channel Dynamics
Anand Priya Singh, Market Analyst for Smart Wearable Devices at IDC India, highlighted a shift in distribution strategies: "The offline channel remains underutilised, often serving merely as a means for brands to offload excess inventory. Due to cost pressures, many brands are shifting their focus toward e-tailer channels, particularly during festive periods. While several smaller brands rely on offline channels, the major players remain heavily dependent on the online channel."

The online channel's share increased to 63.4 per cent from 62.0 per cent in Q1 2024, growing by 17.6 per cent quarter-on-quarter, while offline channel shipments grew by 11.1 per cent quarter-on-quarter.

Looking Ahead
As vendors prepare for the festive season with new product launches and marketing initiatives, the performance of the wearable market in the coming quarters will be crucial. Sharma from IDC India adds, "We will also possibly see refreshed smartwatch portfolios by the smartphone vendors at low to mid-price segments."

However, the market faces significant challenges, including inventory oversupply, pricing pressures, and the need for technological innovation. The ability of manufacturers to address these issues while meeting evolving consumer demands will likely determine the trajectory of India's wearable market in the short to medium term.

As the industry navigates this unprecedented downturn, all eyes will be on the festive season sales and the consumer response to new product offerings.