Smartwatch market falls 32pc as Apple Watch shipments halve

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IDC warns market growth for this year could be “muted” as Watch improvements aren’t expected until early next year

Global smartwatch shipments fell 32 per cent in Q2 – the first time this market has experienced a year-on-year decrease.

This is according to the latest shipment and market share figures from analyst IDC for the April-June period.

It reveals 3.5 million smartwatches were shipped around the world, compared to 5.1 million during the same period a year ago.

Apple remains the leading vendor, but Watch (pictured) shipments dropped by more than halve (55 per cent) from 3.6 per cent to 1.6 per cent, while market share fell from 72 per cent to 47 per cent.

It was the only vendor to experience an annual decline but IDC said the year-over-year 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.

“Muted” market growth

IDC Mobile Device Trackers senior research analyst Jitesh Ubrani said: “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.

“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.”

Samsung Gear S2
Samsung Gear S2

Samsung has held onto second position, with shipments rising by halve from 400,000 to 600,000, while market share was up from seven per cent to 16 per cent.

IDC claimed its Gear S2 lineup “is off to a great start as Samsung has successfully de-coupled the smartwatch from the smartphone”.

Lenovo and LG both saw shipments rise from 200,000 to 300,000. The former’s share trebled to nine per cent while the latter’s doubled to eight per cent.

Participation is imperative

IDC wearables team research manager Ramon T. Llamas said the absence of traditional watchmaker brands among the leading vendors is hurting the market.

“To date, only a small handful of traditional watchmaker brands have entered the smartwatch market, trailing far behind their technology brand counterparts. This seems to be changing, albeit slowly, as key vendors like Casio, Fossil, and Tag Heuer have launched their own models to the market.

“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.

Broader appeal

IDC does expect to see the market return to growth in 2017 driven by the aforementioned market developments. Exactly when that rebound happens will depend heavily on when vendors drive a better use case.”

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

“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.”

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