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CNBC

Smartwatches are dead…for now

Apple Watch shipments plunge 71 per cent as global shipments tank, research shows

PUBLISHED : Wednesday, 26 October, 2016, 11:23am
UPDATED : Wednesday, 26 October, 2016, 11:25am

Global smartwatch shipments tanked 51.6 per cent year-on-year in the third quarter, dragged down by the likes of Apple and Lenovo, according to a new report.

Total smartwatch volumes reached 2.7 million units shipped in the three months to the end of September, down from 5.6 million in the same period last year, according to data compiled by the International Data Corporation (IDC) and released Monday.

The firm noted that the third quarter of 2015 was the first time the Apple Watch had widespread retail availability after a limited online launch, while the second generation of the device was only available in the last two weeks of the third quarter of 2016. This led to a 71.6 per cent year-over-year fall in Apple Watch shipments in the latest quarter. Apple was still the biggest smartwatch vendor by market share.

“Its first-generation Watches accounted for the majority of volumes during the quarter, leading to the significant downturn for the quarter. Its Series One and Series Two did little to stem that decline, although with lower price points and improved experiences, Apple could be heading for a sequential rebound in 4Q16,” IDC wrote in the report.

Apple have never broken down their revenue figures for individual products in their quarterly reports.

Smartwatches were a much-hyped technology when they entered the mainstream around 2014. But since then, demand for the wearables has softened. IDC said that latest quarter’s decline was driven by the fact that a “new look and feel” to watchOS – the operating system on the Apple Watch – did not arrive until the launch of the second-generation device at the end of September.

Google has also delayed the release of the next version of its smartwatch operating system called Android Wear 2.0 until 2017. And Samsung’s flagship Gear S3 smartwatch – announced in September – has still not been released yet.

While smartwatches were out of favour for now, future technology enhancements could broaden the appeal of the device.

“It has … become evident that at present smartwatches are not for everyone,” Jitesh Ubrani senior research analyst at IDC, said in a press release.

“Having a clear purpose and use case is paramount, hence many vendors are focusing on fitness due to its simplicity. However, moving forward, differentiating the experience of a smartwatch from the smartphone will be key and we’re starting to see early signs of this as cellular integration is rising and as the commercial audience begins to pilot these devices.”

Shipment of Garmin’s devices, which have a strong focus on fitness, rose 324 per cent in the third quarter and the company now has 20.5 per cent market share in smartwatches, making it the number two vendor. Samsung saw a 9 per cent rise in shipments, putting it in third place. Lenovo and Pebble both suffered declines and sat in fourth and fifth place respectively.