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Can Apple Hold Off Samsung in the Smartwatch Market?

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Smartwatch market growing robustly

Whereas the global smartphone market expanded just 2.0% YoY (year-over-year) in the second quarter (ended in June) according to Gartner, the smartwatch market expanded by 37% YoY, according to Counterpoint. The smartwatch market’s robust growth may explain why the market has become a prime target for leading smartphone companies such as Apple (AAPL) and Samsung (SSNLF).

While Apple captured 41% of the global market in the second quarter, Samsung’s market share shrank YoY to 2.0% from 6.0% the year prior, according to Counterpoint. But that happened before Samsung’s newest smartwatch brand went on sale.

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Galaxy Watch boasts a cellular feature

Samsung’s Galaxy Watch went on sale in August for $330, on par with the Apple Watch Series 3’s price. Both watches are cellular enabled.

In a move that could spark fierce competition between the two companies, Samsung has picked up Apple’s strategy of partnering with mobile network operators to distribute its cellular-enabled smartwatch. Samsung has teamed up with the top four US mobile operators to distribute its Galaxy Watch.

Verizon is a major Apple Watch distribution partner

Verizon (VZ), one of Samsung’s Galaxy Watch distribution partners, closed the second quarter with 152.7 million wireless customers, while AT&T (T) exited the second quarter with 147.3 million wireless customers. T-Mobile (TMUS) and Sprint (S), which are seeking to merge, have about 130 million wireless customers between them. Verizon is said to be the leading US vendor of the Apple Watch. Apple Watch sales are recorded under Apple’s Other Products segment, where revenue jumped 37% YoY to $3.7 billion in the June quarter.

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