The Indian wearables market has hit a significant milestone, but not in the way many expected. For the first time, the market has seen a decline, with a 10% year-over-year (YoY) drop in Q2 2024, translating to 29.5 million units shipped. This decline marks a significant shift in a market that has been on a steady growth trajectory.

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Key Factors Behind the Decline

Several factors contributed to this downturn:

Cautious Inventory Management: Vendors focused on clearing out older stock ahead of the festive season, leading to fewer new product launches.

Reduced New Product Launches: The market saw a lower number of new product introductions during this period, contributing to the overall decline.

Falling Average Selling Prices (ASP): The ASP for wearables hit a record low, dropping by 10.3% from USD 21.0 to USD 18.8 in Q2 2024.

Challenges in the Smartwatch Segment

The smartwatch category, once a strong performer, has struggled significantly. The segment experienced a steep 27.4% YoY decline in shipments, dropping to 9.3 million units. The market share of smartwatches within the overall wearables market also fell from 39% to 31.5%. Contributing factors include:

Excess Inventory: An overstock of older models limited the introduction and adoption of new models.

Innovation Fatigue: Consumers are less enthused by incremental updates, leading to slower sales.

Price Cuts: Brands have slashed prices to clear existing inventory, pushing the ASP down to USD 20.6 from USD 25.6 a year earlier.

Despite these challenges, the advanced smartwatch segment saw growth, increasing its market share from 1.5% to 2.5%.

Stability in the Earwear Segment

While the smartwatch segment struggled, the earwear category remained relatively stable, with a slight YoY growth of 0.7%, reaching 20.1 million units. The Truly Wireless Stereo (TWS) segment continues to thrive, with its share hitting a record 71%, up from 65.5% the previous year. This growth contrasts with a 16.1% decline in other earwear types, such as tethered and over-ear devices.

Emergence of New Trends

The report also highlighted the rise of a new subcategory within the earwear segment: Open Wireless Solution/Open Ear Solution (OWS/OES). This emerging niche is gaining traction, with companies like PTron, Truke, and Noise introducing models in the affordable range, while Bose continues to dominate the premium end.

Channel Dynamics and Market Shifts

The offline sales channel remains underutilized, primarily serving as a way for brands to offload excess inventory. With cost pressures mounting, many brands are shifting their focus to e-commerce platforms, especially during festive seasons. The share of online channels grew to 63.4%, while offline channel shipments saw a QoQ growth of 11.1%.

Growth in the Smart Ring Segment

In contrast to the overall market decline, the smart ring category showed promise, with over 72,000 units shipped in Q2 2024 at an ASP of USD 204.6. Ultrahuman led this segment with a 48.4% market share, followed by Pi Ring and Aabo. IDC anticipates that more affordable smart rings will be launched by leading wearable brands in the upcoming festive season.

Looking Forward: Market Outlook

As the market approaches the festive season, there is hope that new product launches will help mitigate the decline in smartwatch shipments. However, IDC predicts that the overall market will still see a 10% decline in smartwatch shipments for the year. Brands are expected to refresh their product portfolios, particularly in the low to mid-price segments, to rejuvenate consumer interest in wearables.

Source @ https://www.idc.com/getdoc.jsp?containerId=prAP52515224