Smart watch sales stumble but 32% crash is down to one factor

The worldwide smart watch market has encountered its first ever year-over-year decline in sales, new data released this morning claims.

Preliminary research from IDC’s Worldwide Quarterly Wearable Device Tracker shows that smart watch vendors shipped 3.5 million units in the second quarter of 2016, which was down some 32% from the 5.1 million shipped a year ago.

Apple held the top rank by shipping 1.6 million watches. However, it was the only vendor among the top 5 to experience an annual decline in shipments. In fairness to Apple, 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, IDC said.

Story continues below
Advertisement

Apple’s dominance of the market meant that despite the other large brands all showing growth, the overall market declined. Samsung gained some of the most ground during the quarter as it doubled its market share on the same quarter last year.

“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, senior research analyst for IDC Mobile Device Trackers.

“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.”

Perhaps one of the biggest omissions in the smartwatch market is the absence of traditional watchmaker brands among the leading vendors.

“To date, only a small handful of traditional watchmaker brands have entered the smartwatch market, trailing far behind their technology brand counterparts,” said Ramon Llamas, research manager for IDC’s Wearables team. “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.”

LLamas said that what will bear close observation is how the smarwatch market evolves from here. “Continued platform development, cellular connectivity, and an increasing number of applications all point to a smartwatch market that will be constantly changing,” he said. “These will appeal to a broader market, ultimately leading to a growing market.” 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.”

Top Five Smartwatch Vendors, Shipments, Market Share and Year-Over-Year Growth, 2Q 2016 (Units in Millions)
Vendor 2Q16 Unit

Shipments

2Q16 Market

Share

2Q15 Unit

Shipments

2Q15 Market

Share

Year-Over-

Year Growth

1. Apple 1.6 47% 3.6 72% -55%
2. Samsung 0.6 16% 0.4 7% 51%
3. Lenovo 0.3 9% 0.2 3% 75%
4. LG Electronics 0.3 8% 0.2 4% 26%
5. Garmin 0.1 4% 0.1 2% 25%
Others 0.6 16% 0.6 11% -1%
Total 3.5 100% 5.1 100% -32%
Source: IDC Worldwide Quarterly Wearable Device Tracker, July 21, 2016

Authors

*

Related posts

Top