Apple’s sales decline sends smartwatch market sharply down

Global sales of smartwatches suffer as consumers hold out for next-generation models with better features, with analysts warning of muted growth for the rest of the year

PUBLISHED : Saturday, 30 July, 2016, 5:02pm
UPDATED : Saturday, 30 July, 2016, 5:01pm

The global smartwatch market took a sharp downward turn in the second quarter on falling sales of the industry-leading Apple Watch, a new survey has shown.

Research firm IDC says global sales of smartwatches tumbled 32 per cent from a year ago to 3.5 million units.

Apple remained the market leader with an estimated 47 per cent market share, but sales fell by more than half from the same period last year to 1.6 million, according to IDC. Last week Apple also announced in its quarterly update that the company’s profits slumped 27 per cent from a year ago to US$7.8 billion on a sharp drop in iPhone sales.

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The other top vendors including Samsung, Lenovo, LG and Garmin boosted sales over the quarter, according to IDC, which says Apple’s momentum faded after last year’s launch and strong holiday season sales.

“This is a very cyclical market,” says IDC analyst Ramon Llamas, who notes that consumers appear to be waiting for a next-generation Apple Watch with improved features.

IDC says consumers expect a new Apple device and operating system later this year, which led to lower sales in the past quarter.

“Apple still maintains a significant lead in the market and a decline for Apple leads to a decline in the entire market,” says IDC’s Jitesh 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.”

Apple does not release data on smartwatch sales, and IDC relies on its own surveys and data from distributors and suppliers for its estimates.

The survey showed number two vendor Samsung boosted sales 51 per cent from a year ago to around 600,000, giving it a 16 per cent market share. China’s Lenovo was third with 9 per cent, while South Korea’s LG captured 8 per cent and Garmin 4 per cent.

Llamas says the decline does not necessarily mean the end for smartwatches and other wearable devices. “We are still in the early stages,” he says. “Let’s give it some time and wait for a more robust application selection, and a smartwatch that can go through a cellular connection without a smartphone.”

Llamas says one new trend is traditional watchmakers entering the smartwatch market. “To date, only a small handful of traditional watchmaker brands have entered the smartwatch market, trailing far behind their technology brand counterparts,” he says.

“This seems to be changing, albeit slowly, as key vendors like Casio, Fossil, and Tag Heuer have launched their own models. Still, participation from traditional watchmakers is imperative to deliver some of the qualities sought after by users, namely design, fit and functionality.”