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How Apple Can Regain Share in the Wearables Market

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Sep. 14 2016, Updated 9:04 a.m. ET

Wearable shipments rise 26% YoY in 2Q16

In the quarter ended June 30, 2016, worldwide wearable shipments rose 26% YoY (year-over-year). According to IDC, smartwatch vendors shipped 22.5 million units in 2Q16 compared to 17.8 million in 2Q15. Apple’s (AAPL) wearable shipments in 2Q16 totaled 1.6 million compared to 3.6 million units in 2Q15.

Apple’s market share also fell from 20.3% in 2Q15 to 7% in 2Q16. While Apple’s shipments fell drastically by 57% YoY, other leading smartwatch manufacturers saw improvements in their unit shipments for 2Q16. Fitbit’s (FIT) share improved from 24.9% to 25.4%, with unit shipments increasing 28.7% in 2Q16.

China-based (FXI) (GXC) Xiaomi’s share also fell from 17.2% to 14% with unit shipments increasing 2.5% in 2Q16. Garmin (GRMN) also experienced unit shipment increases of 107% and the firm’s market share rose from 4.2% in 2Q15 to 6.9% in 2Q16.

Apple will be banking on the new Apple Watch Series 2 to penetrate the market in fiscal 2017 and beyond.

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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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