Apple Watch quarterly sales plummet 55pc as consumers look ahead to next generation model

PUBLISHED : Friday, 22 July, 2016, 11:37am
UPDATED : Friday, 22 July, 2016, 12:48pm

Apple Watch shipments wordwide tumbled sharply in the second quarter as consumers held off purchases in anticipation of Apple's release later this year of an updated model, analysts said.

Preliminary data released by research firm IDC showed that Apple Watch shipments plunged 55 per cent to 1.6 million units in the second quarter, down from 3.6 million units a year earlier.

Apple’s share of the smartwatch market fell to 47 per cent, compared with a massive 72 per cent share a year ago.

According to IDC, that led to the first year-on-year decline in the global sales of smartwatches as shipments fell 32 per cent in the quarter.

That slowdown is predicted to result in a muted performance for the overall smartwatch market by the end of this year, even though the widely speculated release of an updated Apple Watch in the next few months could spark fresh growth for the industry.

There were 3.5 million smartwatches shipped in the second quarter, down from 5.1 million units in the same period last year, according to IDC.

“Consumers have held off on smartwatch purchases since early 2016 in anticipation of a hardware refresh, and improvements in watchOS are not expected until later this year, effectively stalling existing Apple Watch sales,” said Jitesh Ubrani, a senior research analyst at IDC’s Mobile Device Trackers group.

Based on Apple’s iOS platform, watchOS is the mobile operating system of the Apple Watch. The top-selling smartwatch was released worldwide in April last year.

Since Apple maintains a significant lead in the global smartwatch market, a drop in Apple Watch shipments has also led to a decline for the overall industry, according to Ubrani.

“Every vendor faces similar challenges related to fashion and functionality, and though we expect improvements next year, growth in the remainder of 2016 will likely be muted,” Ubrani said.

Samsung Electronics, the No 2 global supplier of smartwatches, saw a 51 per cent increase in shipments of its Gear device to 600,000 units in the quarter, up from 400,000 in the same period last year.

That was enough to more than double Samsung’s smartwatch market share to 16 per cent, compared with 7 per cent the previous year.

Chinese technology giant Lenovo Group was the world’s third-leading smartwatch supplier in the second quarter through Motorola Mobility, which it acquired from Google for US$2.91 billion in 2014.

Shipments of Motorola’s Moto 360 smartwatch in the three months to June grew 75 per cent to 300,000 units, up from 200,000 units a year ago. That tripled Lenovo’s share of the smartwatch market to 9 per cent from 3 per cent the previous year.

IDC estimated that LG Electronics posted a 26 per cent year-on-year improvement in shipments of its Urbane smartwatch to about 300,000 units in the second quarter. That was good for an 8 per cent global market share.

Switzerland-based Garmin was estimated to have recorded a 25 per cent year-on-year increase in second-quarter shipments of its vivoactive smartwatch to about 100,000 units. It had a 16 per cent share of the global smartwatch market

Ramon Llamas, the research manager at IDC’s wearables team, said makers of traditional watches remained marginal players in the smartwatch market, despite the launch of several new models.

“Casio, Fossil and Tag Heuer have launched their own models to the market,” Llamas said.

IDC predicted the global smartwatch market to return to growth mode next year.

“Continued platform development, cellular connectivity, and an increasing number of applications all point to a smartwatch market that will be constantly changing,” Llamas said. “These will appeal to a broader market, ultimately leading to a growing market.”