Tim Cook's first major, standalone product is a flop. According to the latest IDC data, sales of the Apple Watch plunged by 55%, from 3.6 million a year ago to just 1.6 million in Q2.
The sharp decline in sales of a product that many "expert analysts" had staked would result in a "wearables" revolution and a new golden era of growth for Apple, is highly unusual for a new Apple product so early in its life and will add to concerns about Apple's growth prospects this year. By reference, the iPhone posted nine years of uninterrupted growth from its launch in 2007 until the first quarter of this year, when unit sales fell by 16% to 51 million the FT writes.
Other companies did better: while Apple remained the top seller, Samsung closed the gap thanks to strong 51% year-over-year growth and a 9% jump in market share to 16%. Lenovo’s Motorola brand also saw a sales increase of 75% to 0.3 million. The Apple Watch's market share has tumbled from 72% at its launch to just 47% in the most recent quarter.
As IDC said, "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."
After initially ramping up in the first three quarters since its launch, sales of the iWatch have sharply stagnated in the new year, with both Q1 and now Q2 posting disappointing sales numbers.
While the plunge in Apple watch sales is troubling, what is worse for "wearables" advocates is that consumers may have gotten moved on. The overall smartwatch market experienced its first-ever decline as shipments fell 32% in the second quarter, totaling an estimated 3.5 million units compared to an estimated 5.1 million units in the year-ago quarter.
Over the past year, Apple has refused to released any official sales figures for the Watch since it was launched in April of last year. While analysts have estimated that it sold 12m units in its first year the number is below many observers’ initial expectations for the first launch into a new hardware category since Tim Cook took over as Apple’s chief executive. The IDC data will only add to concerns that instead of a growth product which will spearhead the next level of growth for Apple, interest in the iWatch as it has been called, was nothing more than a passing fad.
Then again one probably did not need IDC to conclude this: in March, Apple cut the starting price of the Watch by $50 to $299 for the basic Sport model. Since then, retailers such as Best Buy and Target have offered promotions that have cut as much as $200 from other versions of the Watch, in an attempt to encourage buyers.
Apple declined to comment on IDC’s figures, ahead of its earnings report next week. The Watch, a revamped Apple TV and new Apple Music service have so far failed to offset the declines in iPhone and iPad sales, which Tuesday’s figures are expected to show have continued in recent months. We doubt Apple will breakout Apple watch sales data, either next week or ever.