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Apple Watch's US$50 price drop shows reaction to slow 2015 sales

Matt Hamblen | March 23, 2016
Apple Watch 2 announcement was postponed, probably until June or July, for standalone wireless device

Apple's smartwatch-related announcements on Monday, including a price drop, reveal a clever adjustment to slow sales in 2015 for the entire smartwatch category, analysts said.

The biggest news: Apple announced a $50 price cut to $299 for its entry-level 38mm Apple Watch Sport model, along with several new watchband colors. The stylish woven nylon bands will cost $49 apiece when purchased separately from Apple. The 42mm Sport model was also reduced by $50 to $349.

Possibly more important, Apple didn't announced a second-generation Apple Watch, even though many observers thought Apple would do so. The unveiling of a new watch is now expected in June or July, with sales timed for the fall.

Apple Watch 2, or whatever it is finally called, is expected to be thinner and faster than its predecessor. The device also is likely to include standalone wireless capability, perhaps with LTE or 3G, to supplement Bluetooth and Wi-Fi connectivity, several analysts said.

The entry-level Apple Watch price cut came as Apple also expanded its focus on health and medical research apps. The Apple Watch can soon be used with the iPhone to help users actively manage their own medical conditions such as Parkinson's disease through a new software framework called CareKit, the company announced.

Expanding health apps, a cheaper smartwatch entry price and the addition of colorful, fashion-oriented wristbands were wise moves on Apple's part to expand its smartwatch popularity.

Even as Apple CEO Tim Cook noted that the original Apple Watch, which first went on sale in April 2015, had reached the status as the No. 1 selling smartwatch in the world, the claim probably wasn't all that meaningful, analysts noted. That's because smartwatch sales by various vendors were well below initial projections.

Gartner's initial projection of 40 million smartwatches of all brands sold in 2015 was 33% higher than the 30 million that actually sold.

And Apple shipped just 13 million smartwatches in 2015, IDC said, below the 21 million the research firm had projected earlier that year. IDC's claim was also well below other analysts' projections that Apple Watch sales would reach as many as 40 million.

In January, at CES, a Samsung official admitted that the smartwatch market was moving slower than many expected.

But Apple hasn't taken that tone. Cook noted Monday that Apple Watch customers are satisfied and see the devices as an "essential part of their daily lives. " Users are responding to messages from their Apple Watches and tracking their activities and getting up-to-date information, he said, "People also love changing the bands," he said, noting that one-third of Apple Watch wearers switch their watchbands.

 

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