Although Apple has been touting its Watch’s ability to track everything from minutes of brisk activity to glucose levels, it has been vague about its own sales data for the device since it went on sale in late June. A new report, however, suggests that it burst off the blocks and trails only the much-simpler and less-expensive Fitbit in the wearable-devices race.
According to the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker study.
“Apple shipped a total of 3.6 million units in the second quarter of 2015 (2Q15), just 0.8 million units behind Fitbit’s 4.4 million units.”
And it sprinted to the lead in the “smart wearables” subcategory of devices capable of running third-party apps, according to IDC.
Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, said in the news release.
“About two of every three smart wearables shipped this quarter was an Apple Watch. Apple has clearly garnered an impressive lead in this space and its dominance is expected to continue.”
Ubrani also points out the basic wearables category — Fitbit’s’ bailiwick, at least to date — is expected to lose share in the future, “leaving Apple poised to become the next market leader for all wearables.”
CNET’s Ben Fox Rubin reports.
“Right behind Apple, Chinese firm Xiaomi came in at No. 3 on IDC's report, with 3.1 million shipments. The rest of the top five were well behind those three leaders, with Garmin and Samsung shipping less than 1 million units each.”
Some observers, however, are wary about IDC’s conclusions.
MarketWatch’s Jennifer Booton points out that the IDC numbers indicate that the “Apple Watch seems to be performing much better than the company’s earnings report led observers to believe,” as well as comments from Apple executives, including CEO Tim Cook.
Booton writes.
“Piper Jaffray analyst Gene Munster questions IDC’s 3.6 million-unit figure based on Apple’s revenue statement. Munster, who in a report in July estimated Apple Watch sales of 2.5 million units last quarter, said the kind of growth IDC is suggesting would indicate a sharp deceleration of the other sales with which Apple bundles Watch revenues.”
And Raymond James analyst Tavis McCourt “thinks IDC is mushing stuff together,” Barron’s Tiernan Ray reports. But, McCourt contends,
“The big picture here is the wearables market is growing very rapidly (+223%) y/y, which is impressive growth given the annualized volumes already at ~80 million units.”
Ray reports in another post that R.W. Baird’s William Power feels that the Garmin Forerunner 225 and Fitbit Surge generallyoutperform the Apple Watch on running accuracy and software after personally testing them. But Apple Watch, Power concludes, “wins on most everything else” compared to the other two.
Meanwhile, Fortune’s Philip Elmer-DeWitt yesterday filed a story containing what he characterizes as “brave words” from Swatch CEO Nick Hayek. Among them:
- “The Apple Watch is an interesting toy, but not a revolution”
- “As a watch producer, I cannot accept the responsibility of whether my device warns a customer in time before a heart attack.”
Hayek’s observations were part of an interview with the Swiss newspaper Tages-Anzeiger “to hype Swatch’s new line of smartwatches, the Touch Zero One” which, Elmer-DeWitt points out, “seems to have landed in the U.S. without much of a splash.”
Surprising for a device that is said to be “your perfect beach volleyball companion,” no?
Best Buy, which rolled out the Watch at 100 of its stores, is expanding to all of its outsets by the end of September. It also is updating its stores-within-a-store concept by the holiday shopping season; they will “play an important role in Best Buy's Apple Watch strategy,” as Mike Brown reported earlier this week in the International Business Times.
Mike Brown reported what Best Buy CFO Sharon L. McCollam said during the company's quarterly earnings call on Tuesday, August 28.
“I think we can all agree the Apple Watch is certainly iconic and having it in all 1,000 stores by the end of September is a big deal for us.”
Having earned the “iconic” label after a mere three months in the marketplace, the Watch will clearly need a new goal to push it to the max. Market dominance is probably what comes to mind in Cupertino.
COMMENTARY: Don't you just love it when mobile industry experts can't seem to agree on how many Apple Watches were sold? The only person who really knows how many Apple Watches have been sold is Apple CEO Tim Cook, and he hasn't been much help, offering comments full of elation, but no exact figures during Apple Q2 2015 earnings conference call:
- "We started taking pre-orders in 9 countries on April 10, and demand immediately exceeded supply by a wide margin. To prioritize those first orders and to deliver the best experience for our customers, we delayed the availability of Apple Watch in our own retail stores until mid June."
- "We’ve made huge progress with the production ramp across the quarter, and near the end of the quarter expanded into 6 additional countries. And in just the past few days, we’ve been able to catch up with demand, enabling us to expand Apple Watch availability to a total of 19 countries currently, with three more countries to be added at the end of this month."
- "The feedback from Apple Watch customers is incredibly positive, and we’ve been very happy with customer satisfaction and usage statistics. Market research from Wristly measured a 97 percent customer satisfaction rate for Apple Watch, and we hear from people every day about the impact it’s having on their health, their daily routine, and how they communicate."
- "We believe that the possibilities for Apple Watch are enormous, and that’s been reinforced in just the first few weeks since it became available to customers. For example, doctors and researchers at leading hospitals in the U.S. and Europe are already putting Apple Watch to work in improving patients’ lives."
This all sounds good, but Tim Cook never provided any actual numbers to backup his reasons for such elation over the performance of the Apple Watch.
Consumer Interest In Wearables Fading Fast
After reaching a peak level of interest earlier this year, consumers are becoming steadily less enamored of wearable technology in general (and fitness technology specifically).
According to a new report from Argus Insights that evaluated more than 300,000 product reviews, demand for wearables reached a peak in January 2015 (when it was four times higher than in January 2014), but has since dropped significantly.
The market, which includes numerous products including smartwatches, glasses, fitness bands and other sensor-enabled devices, is in a unique position where consumers are losing interest in fitness products (which all tend to do the same things), yet they’re failing to see a purpose for smart watches that justifies their expense.
John Feland, CEO and founder of Argus Insights, tells Marketing Daily.
“[Sales] are still growing year-to-year, but interest is sliding. The fitness band market hasn’t figured out what it can do beyond counting steps, and smart watches aren’t advanced enough yet.”
Though fitness-band category leader Fitbit to gain mindshare with consumers (even weathering competing buzz from Apple Watch’s launch last year), consumer delight (measured from the volume and content of consumer reviews) is dropping. According to the report, consumers use their fitness devices for a few months before putting them aside, Feland says.
Feland says.
“They’re like a smaller, less-expensive treadmill that you use for a few months and then hang your [laundry] on. They need to stumble on a way to make people wear them on a regular basis. Maybe they need to find a way to use advertising to drive revenue, or make some use of the fitness currency beyond the water cooler.”
Meanwhile, delight is increasing for the Apple Watch and other smart watches. But the products’ consumer base is still largely limited to early adopters. Mass consumers, Feland says, have yet to be shown the killer app that makes the device necessary.
Feland says.
“It has become more of a coordination device, rather than a consumption or creation device. The second Apple Watch will tell us a lot about where the market is headed.”
Google Android Wear Raises The Stakes
Very few people have had to bother grappling with the idea of notifications and body vital readings available on their wrists, because not all that many people are buying smartwatches. There’s a real sense that everybody’s waiting to see how things shake out. Smartwatches aren’t really ready for everybody yet, not the way that smartphones are. Nothing drove innovation in the smartphone space faster than competition between Apple and Google. If competition is what it takes to get smartwatches ready for the mainstream, even Apple Watch users should be glad about Android Wear coming to the iPhone.
Android Wear smartwatches come to the iPhone (Click Image To Enlarge)
That’s right: beginning August 31, a select set of Android Wear smartwatches (and all future watches) will work with the iPhone. The app should be rolling out worldwide soon. It’s been a long time coming — and it means that Google will be challenging the Apple Watch on its home turf. Those Android Wear watches will be both cheaper and more varied than the Apple Watch — just like Android itself.
There’s an important caveat, though: when paired to an iPhone, Android Wear watches can’t do as much as the Apple Watch. Nor can they do as much as they can when paired to an Android phone. Right now, only three watches officially support the iPhone, two of which aren’t even available for purchase yet: the Huawei Watch, the Asus ZenWatch 2, and the LG Watch Urbane. Chang says that Google isn’t supporting older watches because it wants them to work right away, without software updates. Chang says.
"In order to guarantee a good experience, where out of the box it will work immediately and you don't have to do any fancy footwork, that's why it has to be the newer watches."
But I suspect that the Android community will find ways around that limitation for older watches in relatively short order.
Making Google Android Wear watches work with the iPhone has to raise some concerns at Apple. If consumers can buy a "cheaper" Apple Watch in the form of an Android Wear watch, and get most of the features they need, this could present problems for Apple Watch sales.
Apple's growth has become more dependant on China to maintain growth in the sales of the iPhone and Apple Watch. With the economic situation in China taken a major hit, you can bet that sale of both the iPhone and Apple Watches will be negatively impacted.
In any event, at some point, Apple will be forced to disclose sales of the Apple Watch. Apple shares have taken a hit, Apple shareholders are an impatient lot, and if Apple Watch sales are lower than has been forecasted, it's better to fess up, admit that the Apple Watch cannot live up to the hype and was never the gamebreaking product that Apple said it could become.
Courtesy of an article dated August 28, 2015 appearing in MediaPost Marketing Daily, an article dated August 28, 2015 appearing in MediaPost Marketing Daily, an article dated July 21, 2015 appearing in Six Colors and an article dated August 31, 2015 appearing in The Verge
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