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Smartwatch shipments take a nose dive

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 25 Oct 2016

Total global smartwatch volumes reached 2.7 million units shipped in 3Q16, a decrease of 51.6% from the 5.6 million units shipped in 3Q15.

The worldwide smartwatch market experienced slow growth in the third quarter of 2016, says IDC.
The worldwide smartwatch market experienced slow growth in the third quarter of 2016, says IDC.

This is according to the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker, which revealed the worldwide smartwatch market experienced a round of growing pains in the third quarter of 2016, resulting in a year-over-year decline in shipment volumes.

Although the decline is significant, IDC says it is worth noting that 3Q15 was the first time Apple's watch had widespread retail availability after a limited online launch. Meanwhile, the second generation Apple Watch was only available in the last two weeks of 3Q16.

Ramon Llamas, research manager for IDC's Wearables team, says the sharp decline in smartwatch shipment volumes reflects the way platforms and vendors are realigning.

"Apple revealed a new look and feel to watchOS that did not arrive until the launch of the second generation watch at the end of September. Google's decision to hold back Android Wear 2.0 has repercussions for its OEM partners as to whether to launch devices before or after the holidays. Samsung's Gear S3, announced at IFA in September, has yet to be released. Collectively, this left vendors relying on older, aging devices to satisfy customers."

"It has also become evident that at present smartwatches are not for everyone," says Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers." Having a clear purpose and use case is paramount; hence many vendors are focusing on fitness due to its simplicity. However, moving forward, differentiating the experience of a smartwatch from the smartphone will be key and we're starting to see early signs of this as cellular integration is rising and as the commercial audience begins to pilot these devices."

According to a report by Business Insider Intelligence, demand for smartwatches has cooled as consumers wait for better functionality.

"But early demand suggests the market could take off when functionality improves. The future of the smartwatch market remains somewhat unclear, however, there is profound opportunity for businesses and developers to begin exploring the nascent smartwatch market. This will give them a head start against competitors," says the report.

Research firm Strategy Analytics says global smartwatch shipments grew 223% annually to reach 4.2 million units in the first quarter of 2016. Apple captured 52% global smartwatch market share, dipping from 63% share in the prior quarter.

Rajeev Nair, senior analyst at Strategy Analytics, says: "Global smartwatch shipments grew a healthy 223% annually from 1.3 million units in Q1 2015 to 4.2 million in Q1 2016. Global smartwatch growth is being driven by consumer demand for Apple, Android Wear and Tizen models across North America, Western Europe and Asia.

"On a sequential basis, global smartwatch shipments fell 48% from 8.1 million in Q4 2015 to 4.2 million in Q1 2016, due to seasonality trends."

According to Juniper Research, the Apple Watch saw more sales in 2015 than all competing smartwatches, despite being released towards the end of April.

Juniper noted the Apple Watch claimed 52% of global smartwatch shipments in 2015 - out of 17.1 million smart watches shipped last year, 8.8 million were Apple Watches.

The research further revealed Android Wear shipments have only comprised of less than 10% of sales for the same year with Samsung's Tizen-based Gear S2 not achieving strong sales volumes since it launched in November.

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