Smartwatch Shipments Slump In Q2: Apple Watch Sales Stall

Smartwatch shipments have slumped in the 2016 second quarter, falling 32 per cent year-on-year, according to the International Data Corporation (IDC), the first time the market has declined.

Vendors shipped 3.5 million units in the quarter, down from 5.1 million year-on-year, the IDC figures show.

While Apple held the top rank, shipping 1.6 million smartwatches, it was the only top 5 vendor to experience an annual decline in shipments.

The IDC, however, notes that the “comparison is to the initial launch quarter of the Apple Watch, which is in many ways the same product offered in the most recent quarter with price reductions”.

“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,” Jitesh Ubrani, IDC Mobile Device Trackers senior research analyst, commented.

“Apple still maintains a significant lead in the market, and unfortunately a decline for Apple leads to a decline in the entire market.

“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.”

Meanwhile, Ramon T. Llamas, IDC Wearables team research manager, noted that thus far “only a small handful of traditional watchmaker brands have entered the smartwatch market”.

“This seems to be changing, albeit slowly, as key vendors like Casio, Fossil and Tag Heuer have launched their own models to the market,” Llamas commented. “Still, participation from traditional watchmaker brands is imperative to deliver some of the most important qualities of a smartwatch sought after by end-users, namely design, fit and functionality.

“Combine these with the brand recognition and distribution these brands already have, and it’s reasonable to expect the smartwatch market to grow from here.”

The IDC expects the market to rebound to growth in 2017, noting that exactly when this happens “will depend heavily on when vendors drive a better use case”.

“What will bear close observation is how the smarwatch market evolves from here,” Llamas commented.

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

Among the vendors, Apple is still far and away the market leader, with the IDC noting the Watch 2.0, along with updates to watchOS, could help drive existing user refresh and deliver first-time buyers.

Samsung holds the number two position, with the IDC observing that “the Gear S2 line-up is off to a great start as Samsung has successfully decoupled the smartwatch from the smartphone”, while, moving forward, focus on the telco channel is likely to remain the core strategy for Samsung.

Rounding out the top five are Lenovo (Motorola), LG and Garmin, with the IDC noting that since last year Garmin has almost doubled its share due to the introduction of new smartwatches like the Fenix 3.