Smartwatch market sees Q2 slowdown

IDC said the worldwide smartwatch market saw its first year-on-year decline, as customers held back in anticipation of new versions of products such as Apple’s market-leading Watch.

Vendors shipped some 3.5 million units in Q2 2016, down from 5.1 million in the same period last year – a drop of 32 per cent. And Apple suffered most, with its shipments more than halving to 1.6 million from 3.6 million.

“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. Apple still maintains a significant lead in the market and unfortunately a decline for Apple leads to a decline in the entire market,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers.

With all vendors facing challenges “related to fashion and functionality”, IDC is expecting the rest of 2016 to be “muted”.

While a number of traditional watchmakers have moved into the smartwatch market, so far this has not translated to volume.

“Still, participation from traditional watchmaker brands is imperative to deliver some of the most important qualities of a smartwatch sought after by end-users, namely design, fit, and functionality. 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,” said Ramon Llamas, research manager for IDC’s wearables team.

Continued platform development, mobile connectivity, and an increasing number of apps, “all point to a smartwatch market that will be constantly changing”, Llamas said.

IDC is forecasting the market will return to growth in 2017 driven by such developments, although when depends on the activities of vendors.