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Is the smartwatch market tanking or on a long, slow climb?

Matt Hamblen | Nov. 4, 2016
Two analyst firms are far apart on Apple Watch shipments in Q3

Analysts disagree drastically over the health of the smartwatch market. Some say the market is tanking. Others say there are favorable signs and predict healthy smartwatch shipments and sales in coming years.

In late October, market research firm IDC said smartwatch shipments in the third quarter declined by 51% from the same quarter of 2015. The total shipped in the third quarter was 2.7 million, IDC said.

By comparison, research firm Canalys on Thursday said smartwatch shipments were up 60% for the third quarter of 2016 compared with the same quarter a year ago. That resulted in 6.1 million units shipped in the latest quarter, Canalys said.

Both companies define a smartwatch as a wearable that has the ability to run third-party apps, so there doesn't seem to be a drastic difference in the kinds of devices that either party includes in its counts.

However, one major difference was how many Apple Watches each analyst firm said were shipped in the latest quarter. IDC said Apple shipped 1.1 million units, a decline of 71%. But Canalys said Apple shipped 2.8 million Apple Watches, nearly three times as many as IDC reported.

Canalys analyst Daniel Matte insisted in an interview that the Apple third quarter number of 2.8 million was "100% accurate" based on multiple sources of information. Even so, he admitted that Apple's 2.8 million watches shipped in the third quarter was a "little less but not wildly out of line" with Apple's shipments for the third quarter of 2015. He wouldn't divulge what Canalys said Apple shipped in the third quarter of 2015 because Canalys had retabulated its early 2015 numbers.

For all of 2015, Canalys said Apple shipped 12 million Apple Watches, which was far below what many analysts and market watchers had predicted. For all of 2016, Canalys predicts Apple will indeed be behind 2015, with 10 million smartwatches shipped.

"The market is very nuanced, and the smartwatch momentum isn't what everybody thought it would be," Matte said. "Our numbers contradict some other analyst numbers out there and are much higher, but we don't think there's a case for thinking the market is nosediving."

IDC analyst Ramon Llamas said in a statement from Oct. 24 that there was a "sharp decline" in smartwatches that "reflects the way platforms and vendors are realigning." Apple didn't ship its second-generation Apple Watch until the end of September, Google has held back on releasing Android Wear 2.0 until next year, and Samsung's Gear S3, announced in September, has yet to be released.

IDC analyst Jitesh Ubrani has repeatedly pointed out over the past year that smartwatches suffer for not having a clear purpose. "Differentiating the experience of a smartwatch from the smartphone will be key," he said in a statement from October.

 

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