Apple is king of a flat smartwatch market, IDC says

Apple Watch Series 2 (apple)
Apple Watch Series 2.

Apple holds the dubious distinction of leading a worldwide smartwatch market that has fallen flat, according to fresh data from IDC. But the company insists sales of the Apple Watch are stronger than ever.

The market research firm reported this week that the overall wearables market grew 3.1 percent year over year in the third quarter. That modest traction was almost entirely to demand for fitness bands, which saw double-digit growth and accounted for 85 percent of the wearables market.

Fitbit shipped 5.3 million units to lead the market with a 23 percent share, seeing 11 percent growth, followed in order by Xiaomi and Garmin. Apple claimed a mere 4.9 percent of the wearables market as Apple Watch shipments plummeted 71 percent, IDC estimated, although the company still owned 41 percent of the smartwatch market.

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“Apple’s decision to launch its second-generation watches in mid-September, towards the end of the quarter, did contribute to its year-over-year decline in 3Q16,” IDC wrote. “However, the primary reasons for the downturn were an aging lineup and an unintuitive user interface. Though both issues have been addressed with the latest generation of watches, Apple’s success will likely be muted as the smartwatch category continues to be challenged.”

Apple CEO Tim Cook told Reuters this week that the company’s smartwatch recently saw record-high sales, however. Cook didn’t exactly refute IDC’s data—and he declined to give specific sales figures—but he claimed the gadget “looks to be one of the most popular holiday gifts this year,” Reuters reported.

“Sales growth is off the charts,” Cook reportedly said via email. “In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product’s history. And as we expected, we’re on track for the best quarter ever for Apple Watch.”

As The Register observed, it’s possible that both Cook and IDC are making accurate claims. Record-high one-week sales of the Apple Watch 2 might not have done much to offset dismal sales earlier in the quarter, and it’s certainly conceivable that momentum could carry through the holidays.

But the smartwatch sector has clearly failed to live up to a significant amount of hype. IDC reported in October that global smartwatch shipments sank 52 percent in the third quarter due to a lack of new devices and platforms. Meanwhile, Pebble was acquired this week by Fitbit for less than $40 million, according to a Bloomberg report, although its debt and other obligations exceed that sum. And Lenovo’s Motorola said last week that it has scratched plans to release a new smartwatch, saying demand simply doesn’t warrant it.

The smartwatch market isn’t dead, of course, but developers and vendors have yet to come up with devices consumers find truly valuable. And it may take a few more years before they do so.

“Smart wearables have been down in recent quarters, but clearly not out,” IDC Research Manager Ramon Llamas said in the firm’s press release. “As user tastes change, so will their needs. That’s the opportunity for smart wearables with multi-functionality and third-party applications, both for consumers and business users. To get there, we need to see more intuitive user interfaces, seamless user experiences, standalone connectivity, and applications that go beyond health and fitness and into personal and professional productivity.”

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