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Apple Watch Sales May Fall: Can It Remain a Dominant Player?

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KGI predicts a sales decline of 25% for Apple Watch

According to KGI, Apple Watch (AAPL) sales will fall more than 25% in 2016. KGI forecasts sales of 7.5 million units in 2016 compared to estimated sales of 10.6 million units in 2015. Drexel Hamilton analyst Brian White stated that Apple might move up the launch of Apple Watch 2 to June 2016. This could result in incremental sales for the second half of 2016.

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Smartwatch segment expected to grow in the long run

According to market research firm IDC (International Data Corporation), the wearable smartwatch market will see strong sales in the coming years. The Apple Watch is expected to drive revenues through 2020. IDC expects Apple Watch to command a 49.4% share of the smartwatch segment in 2016 with estimated sales of 14 million units. That’s far ahead of Google’s Android Wear (GOOG). Android Wear is projected to be in second place with a 21.4% share, or 6.1 million units.

According to a recent forecast, the Apple Watch accounted for 63% of the total smartwatch shipments in 2015. However, Apple didn’t disclose official sales figures. IDC also thinks that the Apple Watch will account for 37.6% of smartwatch sales in 2020 with shipments of 31 million units. It will be followed by Android Wear, which is expected to garner a 35% share with 28.8 million units.

Since the smartwatch segment will likely experience growth in the next few years, Apple is poised to become a market leader in this segment. Last year, retail heavyweights such as Walmart (WMT), Best Buy (BBY), and Target (TGT) started selling Apple Watches. This increased the product’s distribution and reach.

According to research firm Canalys, Apple shipped 12 million smartwatches in 2015. This shows that Apple controls 67% of the total smartwatch market. In November 2015, Canalys reported that Apple shipped 7 million smartwatches since its launch in April 2015. Canalys’s estimate of 5 million shipments during the holiday season put Apple well above rival companies such as Korea’s (EWY) Samsung (SSNLF) and Pebble.

Next, let’s look at the Apple iPhone SE and whether it could add shareholder value.

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