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Worldwide smartwatch market experiences first dip

IDC says shipments fell 32% in the second quarter of 2016

Worldwide smartwatch market experiences first dip
Apple held the top rank by shipping 1.6m watches.

Analyst IDC has announced that for the first time, the worldwide smartwatch market saw a yearover-year decline of 32%, according to preliminary data released.

Citing its Worldwide Quarterly Wearable Device Tracker, IDC said smartwatch vendors shipped 3.5m units in the second quarter of 2016, which was down substantially from the 5.1m shipped a year ago.

Apple held the top rank by shipping 1.6m watches. However, it was the only vendor among the top five to experience an annual decline in shipments. In fairness to Apple, the year-over-year comparison is to the initial launch quarter of the Apple Watch, which is in many ways the same product offered in the most recent quarter with price reductions, IDC noted.

"Consumers have held off on smartwatch purchases since early 2016 in anticipation of a hardware refresh and improvemnets 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."

Perhaps one of the biggest omissions in the smartwatch market is the absence of traditional watchmaker brands among the leading vendors.

"To date, only a small handful of traditional watchmaker brands have entered the smartwatch market, trailing far behind their technology brand counterparts," said Ramon T Llamas, research manager for IDC's Wearables team. "This seems to be changing, albeit slowly, as key vendors like Casio, Fossil, and Tag Heuer have launched their own models to the market. Still, 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, " added Llamas.

He said 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. "What will bear close observation is how the smarwatch market evolves from here," he said.

Llamas said continued platform development, cellular connectivity and an increasing number of applications all point to a smartwatch market that will be constantly changing. "These will appeal to a broader market, ultimately leading to a growing market," he pointed out.

He explained that IDC does expect to see the market return to growth in 2017 driven by the aforementioned market developments.

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