Smartwatch market swells thanks to Apple, but competition remains

Vendor shipped 2.8 million Series 1 and 2 units in Q3 2016, but analysts smell competition.

The release of Apple’s new Series 1 and Series 2 smartwatch models late in Q3 of this year, saw the vendor ship 2.8 million devices.

Unsurprisingly, the boost lead to a total shipment of more than 6.1 million smartwatches for the quarter and an overall annual increase of 60 per cent.

However, according to Canalys analyst, Daniel Matte, Apple still needs to step up its marketing during the holiday shopping season.

“While the new models are selling well, there are still unsold first-generation Apple Watches in the channel,” he said.

“Q4 performance will be key to better assessing the long-term prospects of the improved watch models. Meanwhile, its renewed focus on fitness functionality puts it in more direct competition with Fitbit.

“The inclusion of GPS by Apple and many other vendors now poses a big threat to traditional GPS watches and fitness trackers."

Similarly, Canalys analyst, Jason Low, said Apple needs to improve its watch sales in major markets outside of the US and especially China, as the iPhone’s slowing momentum has affected consumer interest in Apple’s smartwatch.

“The delays to both Android Wear 2.0 and Samsung’s Gear S3 have hurt 2016 smartwatch shipments and resulted in lower growth, to be expected in a nascent market,” Low explained.

“Xiaomi’s wearables partner Huami launching its first Amazfit smart watch was an important development, bringing quality smart watches to a much lower price point of RMB799 which is about $US120.”

Canalys research has also revealed that despite Samsung’s Galaxy Note 7’s impact on its product release schedule for its smartwatch, Gear S3, the company saw a strong quarter, shipping more than 1.1 million units and landing in second place.

The analyst firm said Samsung’s success was a result of savvy smart phone bundling done via carrier channels.

Fitbit remained the world’s number three smartwatch vendor, shipping 1 million units, despite “inadequate marketing and softness in consumer demand.

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