Apple Watch Sales Fall 55% in Q2 as Consumers Wait for New Version

In the second quarter, the global smartwatch market fell 32 percent from the same quarter in 2015, marking the first-ever smartwatch shipment decline.  

Apple Watch, watchOS 2, smartwatches, smartwatch market, IDC

Global shipments of the Apple Watch have fallen 55 percent since it debuted one year ago as consumers wait for an upgraded model to go on sale, while the overall smartwatch market has dropped by 32 percent in the same time span, marking the first worldwide decline since the devices began appearing on the market a few years ago.

IDC reported both declines in a new study released June 21 as part of the analyst firm's Worldwide Quarterly Device Tracker research.

"Smartwatch vendors shipped 3.5 million units in the second quarter of 2016, which was down substantially from the 5.1 million shipped a year ago," the report states. Apple shipped 1.6 million watches in the quarter, but was the only vendor in the IDC study to see a drop in its shipments.

"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, a senior research analyst for IDC Mobile Device Trackers, said in a statement. "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 saw its worldwide Android smartwatch market share increase in the second quarter to 16 percent from 7 percent in the same quarter in 2015, while Lenovo saw its global market share rise to 9 percent from 3 percent a year ago, according to the study. LG Electronics saw its smartwatch market share rise to 8 percent in the second quarter from 4 percent a year ago, while Garmin's market share increased to 4 percent from 2 percent in 2015.

Interestingly, the names of traditional wristwatch vendors do not appear in the listings of the top smartwatch vendors by shipment, Ramon Llamas, research manager for IDC's wearables team, said in a statement. "To date, only a small handful of traditional watchmaker brands have entered the smartwatch market, trailing far behind their technology brand counterparts," he said. "This seems to be changing, albeit slowly, as key vendors like Casio, Fossil and Tag Heuer have launched their own models to the market."

Those traditional vendors will likely get more involved in the market in the future as they deliver more products aimed at fulfilling consumer desires for design, fit and functionality in new smartwatches, he said. "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 report complements research announced in April by well-known KGI Securities financial analyst Ming-Chi Kuo, who wrote in an investment note at the time that he expected Apple Watch shipments to drop by some 25 percent in 2016. That fall will be fueled by shortcomings in the product's app ecosystem, its reliance on an accompanying iPhone and the still-fledgling nature of the wearable device market, according to a recent eWEEK story.

Things have changed quickly for sure. In January, a Juniper Research report found that the Apple Watch quickly captured 52 percent of the global smartwatch market in 2015 , even though the first Apple Watches didn't go on sale until April 2015. The popularity of the Apple Watch eclipsed the shipments of competing products from rival companies in less than a year, according to an earlier eWEEK report. In comparison, smartwatches running Android Wear made up less than 10 percent of sales in 2015. At that time, the lack of a strong use case for smartwatches caused consumer sales to lag, the report stated.