Worldwide Smartwatch market declines in Q3

The worldwide smartwatch market experienced a round of growing pains in Q3, resulting in a year-over-year decline in shipment volumes.

According to IDC, total smartwatch volumes reached 2.7 million units shipped in Q3 2016, a decrease of 51.6 per cent from the 5.6 million units shipped in Q3 2015. Although the decline is significant, it is worth noting that Q3 2015 was the first time Apples Watch had widespread retail availablity after a limited online launch. Meanwhile, the second generation Apple Watch was only available in the last two weeks of Q3 2016. "The sharp decline in smartwatch shipment volumes reflects the way platforms and vendors are realigning," noted Ramon Llamas, research manager, IDCs Wearables team.

"Apple revealed a new look and feel to watchOS that did not arrive until the launch of the second generation watch at the end of September. Googles decision to hold back Android Wear 2.0 has repercussions for its OEM partners as to whether to launch devices before or after the holidays. Samsungs Gear S3, announced at IFA in September, has yet to be released. Collectively, this left vendors relying on older, aging devices to satisfy customers," added Llamas.

Apple maintained its position as the overall leader of the worldwide smartwatch market, yet it posted the second largest year-over-year decline among the leading vendors. Its first-generation watches accounted for the majority of volumes during the quarter, leading to the significant downturn for the quarter.

Garmin posted the largest year-over-year increase among the leading vendors, thanks to its growing list of ConnectIQ-enabled smartwatches and the addition of the fenix Chronos. Garmin’s smartwatches focus on health and fitness, and the applications reflect that strategy. Its total volumes helped close the gap further against a declining Apple and extended its lead ahead over Samsung.

Samsung finished Q3 slightly higher from a year ago on the strength of its aging Gear S2 smartwatches. These still remain one of the few smartwatches on the market that feature full-time cellular connectivity.

Lenovo (Motorola) suffered the largest year-over-year decline among the leading vendors, with multiple channels selling out of Moto 360 devices (both first and second generation) and a scarcity of its recently released Moto 360 Sport smartwatch.

Pebble has launched multiple variants of the Pebble watch and also introduced a new timeline-based user interface, though none of them achieved mass success. After another successful Kickstarter campaign in early 2016, Pebble released the Pebble 2 late in the third quarter. The new Pebble 2 is the first watch by the company to include a heart-rate sensor and has an overall focus on fitness.

Jitesh Ubrani, senior research analyst, IDC Mobile Device Trackers said, "Having a clear purpose and use case is paramount, hence many vendors are focusing on fitness due to its simplicity. However, moving forward, differentiating the experience of a smartwatch from the smartphone will be key and were starting to see early signs of this as cellular integration is rising and as the commercial audience begins to pilot these devices."