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Apple to Roll out Second Generation Watch amid Falling Smartwatch Sales

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Dec. 4 2020, Updated 10:52 a.m. ET

Second-generation Apple Watch

After the Apple Watch (AAPL) was launched in April 2015, Apple is largely expected to unveil its second generation watch on September 7, 2016. According to AppleInsider, the new Apple Watch will have upgrades such as a GPS radio, allowing users to track distance and speed.

Another expected upgrade in the new model is a larger battery. This will offset the battery usage required for the GPS radio. Other new features might include a barometer as well as better waterproofing compared to the first Apple Watch model.

Apple was also looking to introduce LTE (long-term evolution) connectivity to the Apple Watch this year but the same has been delayed due to technical limitations and is expected to be a part of the Apple Watch next year.

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Shipments fell significantly in 2Q16

According to IDC, worldwide smartwatch shipments fell by 32% YoY (year-over-year) in 2Q16 to 3.5 million units, as compared to 5.1 million units in 2Q15. Although Apple (AAPL) continues to lead the smartwatch segment, its share fell from 72% in fiscal 2Q15 to 47% in fiscal 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 by 51% YoY in fiscal 2Q16, and its market share also improved significantly from 7% in fiscal 2Q15 to 16% in 2Q16.

Watches and wearables

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

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

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