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Apple Watch Is No Flop And FitBit Should Be Worried

Apple Watch Is No Flop And FitBit Should Be Worried - StrategyEye StrategyEye
The Apple Watch is having an eventful first year. Since it launched in April, Apple’s first foray into wearable tech continues to face intense media scrutiny. Initial sales and shipments data suggested it was set to become a rare financial upset for the Cupertino giant. Then surveys pointed towards massive user satisfaction. Then, when Apple bundled watch sales into its “other devices” category on quarterly sales reports, some observers suggested that it was covering up poor performance.
Now, new data from IDC suggests the optimists were right and that the Apple watch is a driving force in what is turning into a watershed year for wearable tech.
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Figures
According to IDC’s Quarterly Wearable Device Tracker, Apple shipped 3.6m Apple Watches in Q2 2015, its first sales quarter, making up 20% of the total wearables market. By comparison, market incumbent in the fitness tracking segment Fitbit shipped 4.4m devices, just 0.8m ahead. Of course these are very different devices, but it does enable some sort of benchmarking. Apple’s watch sales were also higher than the figures for iPads and iPhones over the same period in their respective launch quarters, according to a release by the company. Of course, there’s limited value in comparing these as the Apple Watch is launching into a more mature consumer tech market than either of those devices.
The entire wearables market saw 18.1m units shipped in the period. This is an increase of 223.2% from the 5.6m units shipped in Q2 2014. The appetite for wearables is growing and despite apple’s murkier early sales figures, it stands to make huge gains if numbers continue to grow in this direction.
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Cross-Industry Growth
The IDC study points to positive gains not just for Apple, but right across the wearables space. As mentioned, Fitbit maintained market pre-eminence, and saw 158% growth on figures from Q2 2014, although total market share dropped from 30% to 24% year on year. Chinese smartphone giant Xiaomi also posted considerable figures for its Mi Band, which debuted last year. It saw 3.1m shipments, but then Chinese firms, which benefit from low production costs and a protectionist business climate will always do well domestically even if they gain less traction outside the region. A large domestic market in China is large market by any standards, and the company has no immediate plans to break into Apple’s US market.
Garmin was the fourth highest-performer of the quarter. It shipped 700,000 units, posting 40% growth on 2014 figures. Garmin’s products are targeted specifically for amateur athletes, and the company is not planning on mass appeal, so in some ways its market corner is easier defend from the rise of Apple that others.
Rounding out the top five was Samsung, which shipped 600,000 units. The Korean electronics giant saw growth drop 25% from last year, a testament to the strength of competition from major rival Apple, and especially disappointing for the firm which was one of the earliest pioneers in the space. With the sleek, redesigned Gear S2 smartwatch coming soon though, it’s far from out of the running.
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The Future For Apple
Apple’s apparent success is something of a double-edged sword for third parties. Whilst no-one relishes direct competition from one of the most powerful and most successful brands in the world, Apple’s involvement raises the profile of the wearables sector considerably – generally speaking, what’s good for Apple is good for the market, and good for developers working in that market.
“Any time Apple enters a new market, not only does it draw attention to itself, but to the market as a whole,” notes Ramon Llamas, Research Manager for IDC’s wearable tech team. “Its participation benefits multiple players and platforms within the wearables ecosystem, and ultimately drives total volumes higher. Apple also forces other vendors – especially those that have been part of this market for multiple quarters – to re-evaluate their products and experiences.”
As wearable tech become normalised and adoption climbs, hardware prices will come down, lowering barriers to entry for new competitors. The bigger question is whether fitness trackers will get canibalised by smart watches that can perform the sam tasks as well as many more. Fitbit leads the field for now, but it’s wearables offer only basic functionality, as opposed to the smart services offered by firms like Apple and Samsung.  
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