Tim Cook Disputes Report Claiming Apple Watch Losing Share

Market research firm International Data Corp. (IDC) released its findings for wearables, including smartwatches, for the third quarter and found Apple is suffering even though it launched the Apple Watch Series 2 this fall, with sales declining 71 percent compared to last year’s third quarter.

According to IDC, the overall wearable device market saw a 31 percent increase in year-over-year sales during the third quarter, with total wearable shipments reaching 23 million. Apple sold only 1.1 million smartwatches in the third quarter, down from 3.9 million in the year-earlier third quarter. IDC found Fitbit shipped 5.3 million devices, up 23 percent from the year-earlier third quarter. Xiaomi, the second place fitness device maker, saw 16.5 percent growth in the third quarter, shipping 3.8 million devices, while third place player Garmin shipped 1.3 million devices, up 5.7 percent.

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

According to IDC, basic wearables, which is largely made up of fitness bands, accounted for 85 percent of the market in the third quarter and saw double-digit growth. IDC attributed the growth to new models, more users and the summer season, when more people are fitness-focused and are exercising outdoors. Smart wearables capable of running third-party apps — smartwatches — are expected to continue to lag at least in the near term.

“It’s still early days, but we’re already seeing a notable shift in the market,” said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers. “Where smartwatches were once expected to take the lead, basic wearables now reign supreme. Simplicity is a driving factor, and this is well-reflected in the top vendor list as four out of five offer a simple, dedicated fitness device. Meanwhile, from a design perspective, many devices are focusing on fashion first, while allowing the technology to blend in with the background.”