Its share of the wearables market, which includes basic fitness trackers, was an estimated 13.6%, down slightly from 14.1% in the year-ago quarter.
Apple was in third place with its smart watch, which "proved to be a magnificent success for the company" and accounted for 13.6 percent of the market during the quarter, according to IDC.
Fitbit still managed to hold its dominance in the wearable market, followed by Xiaomi, Apple, Garmin and Samsung.
It's still tiny in relation to wrist devices, but ear-worn devices and sensor-laden clothing each surpassed 1% of the entire market for the previous year.
Shipments of such gadgets hit a new quarterly high of 33.9 million units in the final three months of last year, and were up 25 percent to 102.4 million for the entire year, according to an IDC Worldwide Wearable Device Tracker report. The main reason for this decline can be attributed to the company's decision of focusing the USA market heavily, which is on a verge of saturation. Xiaomi's shipments soared by 96.2 percent year on year to 5.2 million from 2.6 million, with Apple's sales rising 13.0 percent year on year to 4.6 million thanks to the lower entry price point of the Watch Series 1 and Series 2 and the inclusion of Global Positioning System on the Series 2.
This and other factors leads IDC to forecast strong growth for the wearables market globally, although it's vendor-push, as opposed to consumer-pull, that's serving as the primary driver. In other countries, Fitbit is challenged by lower cost competitors overseas.
Garmin experienced a slight decline of 4.0% in 4Q16. Fitbit shipped an estimated 6.5 million fitness trackers in the quarter, down from 8.4 million in the year-ago quarter.
Samsung rounded out the top five with the launch of two new models - Gear S3 Classic and Frontier. LTE connectivity has been a key differentiator for Samsung's watches as it has helped decouple them from smartphones, but more importantly, it has opened up a new channel (telcos) to help promote the Samsung watches, the report added.