As Xiaomi takes top spot, wearables may not be exhausted just yet

Dive Brief:

Beijing-based tech company Xiaomi was the top wearables vendor last quarter with 3.7 million devices shipped — 17% of the 21.6 million global total — according to a press release by research firm Strategy Analytics.
The number of Xiaomi wearables shipped rose 23% from Q2 2016, and the company passed both Fitbit and Apple to take the industry's leading spot.
Global shipments in the category overall are up 8% year-over-year based on strong demand for low-cost fitness trackers in China and premium smartwatches in the U.S., industry analyst Steven Waltzer said in the release.

Dive Insight:

The wearables category has been beleaguered since the end of 2016 when growth forecasts were downgraded from several industry observers. CNBC reports that investors and entrepreneurs are still making bets on the category, however, largely on the back of health and fitness applications.

At the end of December, eMarketer changed its outlook for 2017 from 60% growth in the wearables category to just 24.7%. One reason for the change was eMarketer analysts spotting a potential issue of price sensitivity, especially for smartwatches. Strategy Analytics' report offers some validity for that as its industry analyst cited low-cost fitness bands sold in China as one of the primary drivers of category growth in the quarter.

In January, ABI Research provided a more optimistic view for wearables with expected growth to steadily rise through 2021, but with more growth in head-mounted devices than wrist-worn ones. This might be surprising as wrist-worn gadgets are generally the type of wearable that many people have adopted. ABI Research based its prediction on a major increase in industrial uses for head-mounted wearables in enterprise.

Right now, there's more investor interest in wearable data and how it can be tapped in future devices, such as largely invisible devices embedded in clothing. Stephen Kraus, a health investor with Bessemer Venture Partners, told CNBC the "data play" is interesting, but hardware is a tough bet in the long term.