Smartwatch Market Dropped More than 50% Last Quarter

Monday Oct 24th 2016 by Pedro Hernandez
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The wearables category suffered a major drop in the last quarter as consumers wait for what's new.

Smartwatch vendors experienced some "growing pains" last quarter, according to the latest market analysis from IDC.

The smartwatch market dropped 51.6 percent as shipments fell to 2.7 million units in the third quarter (Q3) of 2016. For comparison's sake, Vendors shipped 5.6 million smartwatches in the year-ago quarter, the same quarter the Apple Watch became widely available in retail following its online launch.

Lenovo was the hardest hit, with a 73-percent year-over-year decline in shipments, from roughly 300,000 units to a mere 100,000 units. Apple suffered a 71.6-percent drop, from 3.9 million Watches last year to just 1.1 million last quarter. Nonetheless, Apple remains the smartwatch leader with a 41.3-percent share of the market. Pebble's shipments fell 54.1 percent, from 200,000 units to 100,000.

Garmin was the biggest gainer with a 324 percent increase, from an estimated 100,000 units last year to 600,000 units in Q3. Samsung notched a 9 percent increase on shipments of 400,000 units.

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IDC's data reveals that a wait-and-see attitude pervaded among both consumers and some smartwatch makers.

"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," said IDC research manager Ramon Llamas in a statement. "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."

Llamas also noted that Samsung's Gear S3, with its expanded fitness-tracking capabilities and built-in GPS, is still not available for purchase. The smartwatch made its debut last month at IFA 2016. "Collectively, this left vendors relying on older, aging devices to satisfy customers," he further noted.

IDC senior research analyst Jitesh Ubrani observed that at least for now, "smartwatches are not for everyone." That may change when smartwatches begin venturing out of the shadow of its mobile cousin, the smartphone.

"Having a clear purpose and use case is paramount, hence many vendors are focusing on fitness due to its simplicity," stated Ubrani in prepared remarks. "However, moving forward, differentiating the experience of a smartwatch from the smartphone will be key and we're starting to see early signs of this as cellular integration is rising and as the commercial audience begins to pilot these devices."

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

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