One Year On: How Is Apple Watch Doing In Terms Of Sales?

By | June 4, 2016
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Analyzing Apple Watch performance one year after launch

 

 

Thirteen months and counting. That’s how long Apple Watch – the first wearable device from the Cupertino tech giant – has been with us. Although official sales figures for Watch have not been revealed, it is a known fact that the shipments of the device were off to a super-strong start last April. How has the sales trends, figures and forecasts for Apple Watch been since then? Let’s take a look:

  1. Immense initial hype – And that worked big-time in favour of Apple Watch. Reports from iOS app development forums and channels reveal that nearly 12 million units of the smartwatch were sold last year – approximately two times the 6 million-sales of the first-generation iPhone in 2007. However, the fact that iPhone took its own time to ‘change the way smartphones are used’ should also be factored in, to get a proper perspective. In comparison, Watch already had eager early adopters waiting for it.
  2. Slackening demand – As the early blitzkrieg wore off, the mixed reviews about Apple Watch started to affect its hitherto rampaging sales. A senior analyst from Pacific Crest Securities lowered his sales projections by 4.5% in 2015 (from 11 million to 10.5 million). For 2016, his estimates are even more grim. Around 21 million units of Watch are expected to be shipped this year – 12.5% less than the initially projected sales volume (~24 million).
  3. Per-day sales – Another metric that should have Apple sit up and take notice is the rapidly declining per-day sales figures of the smartwatch. Last April, around 200000 units were purchased in a single day (during the April 10 week). From those heady figures, the sales figures have plummeted to an average of 18000 to 20000 per day (with disappointing days registering 5000 to 10000 sales not being uncommon). Overall, the per-day sales have fallen by over 90% since April 2015 - an alarming decline.
  4. Poor app performance and over-dependence on iPhone has hurt – The lofty price figure of Apple Watch is a big barrier for the average buyer – but even those who can and have afforded the device have not been entirely satisfied. One of the biggest complaints about Watch has been its extremely laggy processor speed app performance. Without a paired iPhone, the Watch isn’t of much use – and that has also come in for some flak. Even after a year, the perception about Apple Watch is that it is an ‘expensive notifications device’, with unsatisfactory app performance. Hopefully, those who make apps for Apple Watch will come up with better native apps (mandatory from June 1) for the smartwatch.
  5. Interest is dwindling – The falling demand levels of Apple Watch, understandably, stems from flagging interest about the smartwatch. Professional WatchKit app development experts have reported that the interest in Apple Watch is only about one-fifths of what it was for the iPhone in 2007. At present, going by search volume data (from Google Trends), the interest level in Apple Watch is lower than the iPod. The launch of Apple Watch 2 later this year will boost the interest levels for sure – but it remains to be seen whether the interest sustains over time.

Note: Traditionally, Apple does not do any major overhaul in the form factors of consecutive versions of its devices. As such, Apple Watch 2 is likely to be just an S-styled upgrade (like the ones iPhones get). Will that be enough to get prospective buyers hooked?

  1. Not the leader in the wearables market – Far from it. At the end of 2015, Apple Watch managed to take up just a tick under 15% market share – a long way off the 21% share that Fitbit enjoys. Interestingly, the year-end market share of Watch was lower than even that of Xiaomi. Given that both Fitbit smartwatches as well as Xiaomi is significantly cheaper than Apple Watch, this is not much of a surprise. What’s also noteworthy is, the cheapest version of Watch (Watch Sport, at $349) has the maximum demand, while the more premium models have fewer takers.
  2. Made a mark in the luxury watch market – Not all is doom and gloom for the first-generation Apple Watch. It might not have been a game-changer like iPhone – but it has definitely created a splash in the luxury markets sector. Market analysts and mobile app developers reported that Watch pulled in $6 billion in sales revenue in 2015 – a whopping $1.5 billion more than what Rolex managed to do during the year. In fact, the first-year revenue figure of Apple Watch was around 30% of the total revenue from the collective sales of leading Swiss watch brands in 2015.
  3. Slash in price did not translate to increased sales – The entry level price for Apple Watch Sport was slashed by $50 at this year’s March 21 event (where the iPhone SE and the 9.7” iPad Pro were launched). That, however, did not lead to a spike in Watch sales – as many iPhone app developers had expected. On the contrary, a recent ITG Investment Research report showed that sales of Apple Watch plunged by around 40% in the 2nd fiscal of 2016. A definite indication that the novelty factor of the smartwatch is well and truly gone.
  4. Steadily dropping global market share – In 2016 Q1, Apple Watch had a 52% share in the worldwide smartwatch market. While not a poor performance in any stretch of the imagination, the fact remains that this figure is almost 11% lower than that in the previous quarter (~63%). The figures from last quarter, in turn, were down from the 75% market share reported in 2015 Q2. At a time when total shipments is rising rapidly (the increase was almost 225% in the first quarter of 2016), Apple Watch is going backwards.

Note: Some of the dropping sales can be attributed to the fact that many people are actually waiting for Apple Watch 2 to arrive this fall. Instead of spending money on the ‘older’ and the ‘laggy’ first-gen device, they would prefer getting the new and improved model.

        10. Customers remain undecided – KGI has also estimated the shipments of Apple Watch, and its report makes for dull reading too. The sales are likely to be around 3 million units lower this year – a remarkable stat, considering that the smartwatch had only about 8 months in 2015, and will get the entire year in 2016. In a recent survey (sample: 2500 respondents), only 47% opined that Apple Watch is a ‘successful’ product. Interestingly though, nearly 78% of existing Apple Watch-users were satisfied with the gadget, and most of them were planning to upgrade to Apple Watch 2.

        11. The price factor – As none other than Steve Wozniak pointed out at a Reddit session, the price difference between a lower-end and a higher-end Watch model is around $500 – and all that the more expensive models have are extra bands. However stylish and attractive these Watch bands might be, they cannot really justify the huge gulf in the pricing points. Apple Watch has become more of a player in the jewelry market, and not many people are bothering to buy the more pricey models.

         12. Troubles ahead? – Right at this point in time, market forecasters and mobile app developers feel that Apple does not have to be too worried about the shaky performance of its smartwatch so far. After all, the iPhone is still the single biggest money-earner for the company – contributing around 68% of the total revenue of the company in 2016 Q1. However, iPhone 6S and iPhone 6S Plus have performed weakly in comparison with the record-breaking iPhone 6 and iPhone 6 Plus. iPhone 5S, a 2-year old flagship, is still going strong. With iPad sales remaining flat and Apple Watch struggling – there might be problems as the iPhone market moves towards saturation.

Note: Of course, iPhone 7 might turn out to be super-successful, and Apple Watch 2 (free from its over-reliance on iPhone) can get the company moving forward in the smartwatch market.

It would be unfair to brand Apple Watch as a flop already. Yes, the smartwatch has run into problems after the first few weeks’ impressive sales – but it still remains a strong enough player in the domain of wearable technology. If the existing processor lags and battery problems (along with a bump in the quality of Watch applications) are resolved in the upcoming Watch 2, things can once again start looking up for the Apple smartwatch.

 

 

Hussain Fakhruddin
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Hussain Fakhruddin

Hussain Fakhruddin is the founder/CEO of Teknowledge mobile apps company. He heads a large team of app developers, and has overseen the creation of nearly 600 applications. Apart from app development, his interests include reading, traveling and online blogging.
Hussain Fakhruddin
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