This is a turning point in the wearables market, with basic wearables declining in sales for the first time as more customers opt for feature-filled smartwatches, according to the latest global report from the International Data Corporation (IDC).

The report, which focused on the second quarter of 2017, shows a .9% drop in shipments of basic wearables, which are defined as those devices that do not run third-party apps, such as the Fitbit Blaze, although Fitbit just announced a new smartwatch, the Ionic, which will be in retail stores in October 2017 and will include third-party apps.

SEE: Fitbit fights to stay relevant with new entry into smartwatch market (TechRepublic)

Shipments of smartwatches grew 10.3% during the second quarter of 2017. Smartwatches include the Apple Watch and the Garmin Forerunner.

Consumers and business users are opting to purchase smarter and more feature-filled wearables as opposed to health and fitness trackers that measure only a few things such as steps and heart rate. One year ago, only 24.5% of wearables included embedded GPS, while now that number is at 41.7%, according to the IDC.

“I think with the smartwatch, we’re getting past that first phase of what the heck is a smartwatch and what can it do and what is it supposed to do. We’re getting past that first experimental design phase. It’s a more mature product. That’s what’s helping smartwatches take off,” said Ramon Llamas, research manager for the IDC’s wearables team.

Llamas pointed out that there was triple-digit growth from smart clothing and ear wear such as headphones during the second quarter of the year. “It’s not always about the wrist. It’s moving toward the chest and the torso and the feet. We’re moving the [wearables] experience to different parts of the body and at the same time we’re measuring different biometric readouts. Some of these things are useful to some people, but not all. In professional sports people want measurements of VO2 max compared to heart rate so you can see when the body is fatiguing. And with people who take running seriously, you want to know how hard are you planting down your foot.” VO2 max stands for “maximal oxygen consumption” and is the maximum rate of oxygen someone is capable of, as measured during incremental exercise.

Xiaomi, which tied with Apple as the number one manufacturer of wearable devices in the first quarter of 2017, ended up as the sole first-place manufacturer with 3.5 million units shipped in the second quarter of 2017. Xiaomi is not a well-known brand in the US; most of its wearables sales are in China.

Apple came in second, with 3.4 million units shipped, tying with Fitbit, which also shipped 3.4 million units. Garmin came in fourth with 1.4 million units shipped, and Fossil was in fifth place with 1 million units shipped.

SEE: Fitbit falls behind as Xiaomi competes head-to-head with Apple in wearables market (TechRepublic)

Samsung, which manufactures the Gear lineup of smartwatches, fell off the top five list. During the first quarter of the year, Samsung came in fourth place with 1.4 million units shipped. Llamas attributed this ranking change to a lack of new devices, and also the manufacturer not bundling a wearable device as a gift with the purchase of the new Galaxy S8, as it did with smartphones in 2016 and early 2017.

This is the first time that the Fossil Group has placed in the top five manufacturers, and is due in large part to its 2015 acquisition of Misfit, which resulted in a planned release by the end of 2017 of more than 300 connected watch styles across 14 brand names including Fossil, Michael Kors, Diesel, Emporio Armani, and Kate Spade.

Fossil announced on Wednesday this week that it will be further expanding its lineup in time for fall and holiday sales with new Android Wear smartwatches including the Misfit Vapor, the Michael Kors Access Sofie for women, the Michael Kors Access Grayson for men, the Fossil Q Venture and Fossil Q Explorist, the Emporio Armani Connected, and the Diesel On Full Guard smartwatch. It will also add new brands to its touchscreen smartwatch lineup in 2018.

The top 3 takeaways for TechRepublic readers

  1. Shipments of basic wearables, which do not run third-party apps, fell slightly during the second quarter of 2017, according to the IDC.
  2. Smartwatch sales increased during the second quarter of 2017, showing that customers are more interested in feature-filled devices.
  3. Xiaomi was the top ranking wearables manufacturer, and Samsung dropped off the list of the top five, with Fossil making an appearance for the first time during the second quarter of 2017.

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