The growth in global smartwatch shipments in 2016 was largely driven by Apple Inc. (NASDAQ:AAPL) as Samsung Electronics Co., Ltd. (KRX:5930) and other vendors failed to give any competition to Apple Watch. Strategy Analytics estimated in its latest report that Apple grabbed 55% of total global smartwatch shipments in 2016, outclassing Samsung with distinctive margin. Overall 21.1 million units of smartwatch were shipped during the last year, resulting in 1.4% YoY growth in global smartwatch shipments.
But not everything goes in favour of Apple Watch. Despite having controlled the largest chunk of the pie in 2016, Apple’s share in global smartwatch shipments is declined 10.4% point, down from 65.4% in 2015.
The second largest vendor Samsung also recorded 1.6% point decline in its market share. Interestingly, despite the stumbling steps of Android Wear the market share of other vendors, which are still hooked with Android, swelled to 33.6% in 2016 from just 21.6% in 2015.
Analysts believe that demand of the new Apple Watch Series 2 during the holiday season was surprisingly high. It not only helped Apple to clear its large backlog of smartwatch inventory but also made the company to record half of the year shipments in the fourth quarter. Out of total 11.6 million units of Smartwatch that Apple shipped during the whole year, 5.2 million units were shipped in Q4 alone.
The Cupertino giant has introduced Apple Watch Series 2 in September 2016. With built-in GPS, water resistant to 50 meters, lightning-fast dual-core processor, it is also known as the most accurate wrist wearable for fitness tracking, according to a study by Cleveland Clinic.
Tim Cook was confident about the success of Apple Watch Series 2. In an email year December last year, he told Reuters that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year.
The relatively high demand of Apple Watch Series 2 in two major developed markets – US and UK – led Apple to register the growth.
Global Smartwatch Shipments Q4 2016
The fourth quarter helped the global smartwatch industry to return to growth after the decline in two consecutive quarters. Apparently, people found smartwatches worthy enough to gift during the holiday season. 8.2 million units of smartwatch were shipped in Q4 2016, accounting for 38.7% of the total shipments during the year.
But there are also few words of precaution from Cliff Raskind, Director – Strategy Analytics, for all smartwatch vendors.
“The smartwatch industry is showing tentative signs of recovery this year, but it is not fully out of the woods just yet and there remain several barriers to growth that must be addressed. Smartwatch vendors like Samsung need to launch more exciting or cheaper models, Apple must engage closer with mobile operators to stock or subsidize its popular Watch portfolio, while component makers need to develop more accurate sensors for health and fitness tracking that consumers will trust and use more”, says Cliff.
On the other hand, Samsung has apparently failed to excite potentate buyers for Tizen-powered Gear smartwatches. The estimated shipments of Samsung smartwatches is down to mere 0.8 million units in Q4 2016 from 1.3 million units in Q4 2015. One of the major reasons behind Samsung’s poor performance was the late introduction of Gear S3 model in the quarter.
Despite declining market share Apple and Samsung, together, accounted for nearly 75% of smartwatch shipments in Q4 2016. Even if we analyse the overall yearly performance of both the companies, they still stay far ahead of their competitors like Fitbit, Garmin and Huawei.
By 2020, the smartwatch shipment is estimated to grow to 82.5 million units, of which 65% will offer cellular connectivity.