Xiaomi moves further up the wearable ranks

A Chinese employee is seen at the stand of Xiaomi during a fair in Nanjing city, East China's Jiangsu province, June 26, 2014. [Photo/IC]

Xiaomi Corp's 79 yuan ($13) fitness band has propelled the Chinese company to the top rungs of the global wearables market and made it the second-largest player, an industry report said on Thursday.

It was another unlikely success for the five-year-old smartphone vendor, considering that Xiaomi only launched the first-generation wearable product less than a year ago with basic features－not exactly the formula that market leaders like Fitbit Inc or Jawbone Inc would follow.

Xiaomi shipped 2.8 million Mi Bands during the January-March period, accounting for roughly one quarter of the total shipments of wearables.

Fitbit continued to lead the market with shipments of 4 million units during the period, according to industry consultancy International Data Corp. The report did not include Apple Watch shipments as sales of the product began only in April.

"Xiaomi started the year by blasting through the 1-million-unit mark with its Mi Band for the first time, a significant feat made all the more impressive considering the device just started shipping during the second half of 2014," said the IDC report.

The Mi Band, able to track steps and alert incoming calls, is available in India, the United States, the United Kingdom and a number of overseas markets via its online stores. However, the main market for the products continued to be in China.

The Mi Band may not be as sophisticated as its rivals, but Xiaomi has been teaming up with social networks to make the users more reliant on the product. The company is working with WeChat, the local messaging application of Tencent Holdings Ltd that has more than 500 million active users, to upload physical exercise and health data for friends to compare and analyze.

The low price tag has prompted a large number of people to become first-time wearable users.

In addition, with an increasing number of Chinese taking to jogging and other fitness exercises, Xiaomi was able to attract the growing middle class who is willing to spend some money on fitness equipments.

Ramon Llamas, research manager of wearables at IDC, said demand from China and other emerging markets is on the rise and vendors are eager to seek new opportunities.

But it remains uncertain how long the simple-in-feature, low-in-price Mi Band will be able to hold users' attention.

Amy Teng, a Taiwan-based analyst with research company Gartner Inc, warned low-end products may damage people's interests in wearable devices in the long run.

"Chinese players need to have a longer vision, spend more time and energy in product development and services related to the data collected from users," Teng said. "Most of them only focus on how many products they can sell today."

Both analysts agreed that Apple Inc's smartwatch will alter the wearable market landscape this year.

"The Apple Watch will likely become the device that other wearables will be measured against. It will force the competition to up their game in order to stay on top," according to Llamas.