Apple Watch Grabs 63.4% Market Share for 2016, But It’s All Not Good News

Apple watch grabs 63.4% smart watch market share, but it's not all good news

During the holiday quarter from October 1 to December 31, 2016, Apple Watch is estimated to have shipped over 5.2 million units, giving it a whopping market share of 63.4% in the global smart watch market. But there’s more to it than meets the eye, as we’ll soon show.

The record-breaking shipment volume validated CEO Tim Cook’s words at the beginning of December that Apple Watch was “one of the most popular holiday gifts” of 2016.

The information came from Strategy Analytics, a research firm, which has been tracking smart watch shipments from major players in the space.

While Apple was the clear leader, the distant second place was nabbed by none other than Apple’s chief smartphone rival, Samsung Electronics.

Samsung’s smart watches only saw shipments of 800,000 units during the same quarter.

Other makers, such as Huawei, Fitbit and Garmin, collectively shipped 2.2 million units, accounting for a 26.8% market share.

Apple Watch market share for Q4 2016 hits 63.4%

Now for the Real Apple Watch Sales Performance Analysis

But if we look at the data closely, we’ll see something very surprising. Although Apple had maintained its dominance in the smart watch space, their market share only crept up by 0.4% year over year. The data clearly shows that Apple Watch came it with a 55% market share last year compared to 65.4% the year before.

One thing we can’t afford to miss is that the data for Apple Watch shipments in 2015 only cover the 8 months or so since the product was launched. That means Apple could actually be losing market share rather than growing stronger.

MacRumors completely misses this in their report, stopping short of analyzing the reality behind the numbers.

Consider this…

Apple was launched on April 24, 2015, which means 2015 shipments only included those made from May to December – either months, give or take.

Second, the original Apple Watch wasn’t as widely available in global markets that year.

Third, they only had one product (and don’t talk to me about “variants” – it’s essentially a single product with different clothes on and a plus size option) during the year.

Despite that, Apple shipped 13.6 million units of the original Apple Watch in 2015. In 2016, with a full year’s count, many more markets and two lines of product, they only shipped 11.6 million units.

Sales are on the decline, and it’s irrefutable. It doesn’t matter what market share they grabbed in 2016. What matters is absolute numbers.

What’s even more interesting is that the “Others” in this listing grew market share from 21.6% to 33.6% – more than a third of all smart watch devices sold. Moreover, “Others” shipped 4.5 million units in 2015 against 7.1 million units in 2016.

That means Apple is losing sales and will eventually lose market share if they don’t keep up with the times in the smart watch market, figuratively speaking.

Garmin, Fitbit and Huawei are closing in on Apple and Samsung. They already have a two-thirds market share and a healthy year over year growth of nearly 60% (from 4.5 million to 7.1 million.) Both Apple and Samsung showed lower shipments in 2016.

Another thing to note is that total global smartwatch shipments only grew from 20.8 million shipments to 21.1 million units shipped. That’s a growth of only 1%. It implies a relatively stable market, but what it also means is that “Others” are growing at the cost of Apple and Samsung.

Consumer preference is clearly shifting away from Apple and Samsung. It’s barely discernible now because of Apple’s continued dominance of the market, but it’s there just the same.

Apple Watch series 3 is likely to come out in September 2017, and will be made by Quanta Computer, per a report that cited the Economic Daily News, a Chinese news site. The same sources also said that Apple had shipped a total of 7.5 million units in 2016 – significantly lower than the estimate of 12 million units that was forecast in early 2016.

It’s clear that Apple is losing ground, and if the smart watch market doesn’t pick up this year, Apple may lose even more to smaller players.

We’ll keep a close eye on this market so you know what to expect as 2017 progresses. Stay tuned!

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