IDC Blames Dramatic Drop In Q2 Smartwatch Shipments On Tanking Apple Watch Sales

Preliminary number crunching from International Data Corporation (IDC) reveals that smartwatch shipments are down for the first time since the wearable became a thing, declining a hefty 32 percent year-over-year in the second quarter of 2016. That puts overall smartphone shipments at just 3.5 million units for the quarter, compared to 5.1 million in the same quarter a year ago.

Out of all the smartwatch players, Apple was hit the hardest by the relative disinterest in the category. It was also the only smartwatch vendor to experience a decline in shipments—Apple shipped just 1.6 million Apple Watch devices in the second quarter of 2016, which is 2 million less than it shipped a year ago. That knocked its share of the market down from 72 percent to 47 percent, though the next closest competitor (Samsung) is in a distant second place with a 16 percent share of the smartwatch market.


"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," said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers. "Apple still maintains a significant lead in the market and unfortunately a decline for Apple leads to a decline in the entire market. Every vendor faces similar challenges related to fashion and functionality, and though we expect improvements next year, growth in the remainder of 2016 will likely be muted."

In other words, IDC thinks this is a temporary lull rather than an indicator of a passing fad. IDC also notes an absence of traditional watchmakers competing in the smartwatch category. That's starting to change as companies like Casio, Fossil, and Tag Heuer jump in, and as things ramp up, it could alter the smartwatch scene altogether.

"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," said Ramon T. Llamas, research manager for IDC's Wearables team. "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."

IDC says it will also be important to see how the smartwatch category evolves. As more and better services and features become available, the smartwatch category could attract new users, "ultimately leading to a growing market" in 2017.