We have previously reported that the smartwatch industry is going through rough weather this year, seeing decline in sales and lack of demand amid the rise of fitness trackers and the continuing dominance of smartphones. A recent research report from IDC on smartwatch shipments in the third quarter has confirmed the same with the likes of Apple, Lenovo (Moto) and Pebble suffering big declines in their fortunes.
Apple's example is the most startling of all. In Q3 of last year, Apple Watches constituted 3.9 million out of a total of 5.6 million smartwatches sold across the globe. After Apple, Samsung was the largest seller of smartwatches with 400,000 units sold followed by others like Lenovo, Pebble and Garmin. In the third quarter of this year, the total number of smartwatches sold across the globe was only 2.7 million, and the difference in numbers matched the difference between Apple's numbers between Q3 of last year and this year, with the rest of the players in the industry maintaining course.
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Compared to 3.9 million smartwatches sold in Q3 of last year, Apple managed to sell just 1.1 million in Q3 of this year. This represents a fall of 71.6% year on year and which reduced Apple's market share in the period from 70.2% to just 41.3%. In comparison, the largest gainer in Q3 was Garmin who registered a growth of 324.2% by selling over 600,000 smartwatches compared to just 100,000 in Q3 of last year. Lenovo's sales dropped from 0.3 million smartwatches to 0.1 million smartwatches and Pebble's sales halved from 0,2 million last year to 0.1 million in Q3 of this year.
"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," said Ramon Llamas, research manager for IDC's Wearables team.
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IDC's research notes that the fall in Apple's smartwatch sales was due to the delayed launch of Apple Watch Series 2 which arrived around a year and a half after the inaugural Apple Watch. Since the Apple Watch Series 2 launched towards the end of the quarter, it's sales hardly had any impact on the overall figures and this suggests that Apple's performance may undergo a steep rise in Q4 thanks to the arrival of it's new smartwatch as well as due to festive season sales.
This fact was supported by Apple CEO Tim Cook who, in an e-mail to Reuters today, claimed that sales of Apple Watches in the first week of the festive season 'was greater than any week in the product’s history.' He added that Apple is on track for the best quarter ever for Apple Watch, even though he did not share actual number of watches sold during the first week which isn't surprising because Apple never does. If the demand of the Apple Watch Series 2 is anything like what Cook claims, then we should be looking at around 3 to 4 million smartwatches sold by Apple alone in Q4, if not more and which should perk up the industry's numbers as well.
Compared to Apple, Samsung's new Gear S3 is a decent smartwatch but the Gear S2 could never compete with the Apple Watch in terms of numbers sold. Samsung sold around the same number of smartwatches in Q3 as in the same period of last year as it decided to bundle in smartwatches with it's premium smartphones like the Galaxy S7, S7 Edge and Galaxy Note 7. This way, the company managed to give away more smartwatches in Q3 compared to the existing demand and it will be interesting to see if the company will be able to repeat the performance in the present quarter. With the arrival of Apple Watch Series 2 and the losses suffered by it's smartphone division, it seems Samsung may struggle to sell any more than half a million smartwatches before the end of the year.