Shatter is the native-shaped twin of scatter: sh- where Norse influence gave sk-. Old English regularly turned its sc- into sh-, so shatter shows the ordinary English development while scatter shows a northern form under Scandinavian influence. The two were one word in the mid-1300s, both meaning to scatter or throw about.
They then divided the work. Shatter took the sense of breaking into pieces, recorded from the mid-1400s, and scatter kept the sense of dispersing. Traces of the older overlap survive in the parallel formations scatter-brained and shatter-brained, which both existed. Carlyle in 1841 coined shatterment, which did not last, and shatters meaning fragments is from the 1630s — the source of the phrase in shatters, now largely replaced by in tatters.
shatter (v.) mid-14c. (implied in toschatered ), "scatter, disperse, throw about," transitive, probably a variant of Middle English scateren (see scatter (v.)), perhaps reflecting confusion of sk- and sh- from Norse influence. Compare Old Dutch schetteren Low German schateren . Formations such as scatter-brained had parallel forms in shatter-brained , etc. The meaning "break in pieces, as by a single blow" is from mid-15c. Intransitive sense of "fly apart, become scattered, be broken in fragments" is from 1560s. Related: Shattered ; shattering . Carlyle (1841) used shatterment "act or state of shattering or being shattered." Shatters "fragments" is from 1630s. also from mid-14c.