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Can Apple Overcome a Sluggish Hardware Market in 2016?

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 9
Can Apple Overcome a Sluggish Hardware Market in 2016? PART 9 OF 11

Wearables Market Growth to Drive Apple Watch Sales

Apple watch shipments fell significantly in 2Q16

According to IDC, worldwide smartwatch shipments fell 32% YoY (year-over-year) in 2Q16 to 3.5 million units compared to 5.1 million units in 2Q15. Although Apple (AAPL) continued to lead the smartwatch segment, its share fell from 72% in 2Q15 to 47% in 2Q16. Shipments also fell drastically for Apple from 3.6 million units to 1.6 million units in the same period.

In contrast, Samsung’s (SSNLF) smartwatch shipments rose 51% YoY in 2Q16 and its market share also improved significantly from 7% in 2Q15 to 16% in 2Q16. IDC also stated that the worldwide wearables market is expected to grow at a CAGR (compounded annual growth rate) of 20.3% from 2016 to 2020. Total shipments are projected to rise from 79 million in 2015 to 101.9 million in 2016 and 213.6 million in 2020.

Wearables Market Growth to Drive Apple Watch Sales

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The watch category, popularized by Apple, accounts for 41% of the total wearables shipments in 2016 and is expected to grow at a CAGR of 27.8% between 2016 and 2020. Fitness-focused wristbands that drive revenues for Fitbit (FIT) and China’s (FXI) Xiaomi account for 50.2% of the total market. They’re expected to grow at a CAGR of 4.3% in the previously mentioned period.

By 2020, the watch is expected to account for 52% of the wearables market. The wristband is expected to account for 28.5% of the total market.

Apple is confident of Apple Watch in the long run

Although Apple Watch shipments fell drastically in fiscal 3Q16, it’s still the best-selling smartwatch globally. In July 2016, J.D. Power ranked it the highest in customer satisfaction. Customers can upgrade their watches later this year when Apple is expected to launch the watchOS 3.

The watchOS 3 is likely to have improved features such as an enhanced user interface, activity sharing, and fitness and heath capabilities.

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