Apple dominates the smartwatch market — but competition looms
With the release of its record-breaking earnings report for the fourth quarter of 2016, Apple silenced its haters (at least for a moment) and gave us fewer reasons to doubt its decision making process. Still, the company won't reveal any specifics about the Apple Watch, but using new smartwatch market projections from analysts, we can take a stab at just how well the Apple Watch sold last year.
If projections from market research firm Canalys are accurate, the Apple Watch absolutely dominated the wearable market in the last quarter and in 2016 as a whole, setting records and taking up nearly three times the market share of its nearest competitor. That type of dominance is exactly what Apple needs going forward, since the smartwatch field is about to get much more crowded with entries from big name challengers.
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According to the Canalys projections, Apple shipped more than 9 million units in the quarter, which was (unofficially) a record. This resulted in another (estimated) record, as Apple Watch sales generated revenue of over $2.6 billion, which accounted for more than 80 percent of the market's total smartwatch revenue.
Canalys analysts guessed that Apple's Q4 success was the result of having both the Series 1 and 2 as attractive options for smartwatch buyers, especially given the Series 1's lower price point and the company's overall focus on the fitness-centric features of the devices. We predicted this would happen back in December, after the smartwatch market limped into the 2016 holiday season.
Apple is keeping to course by keeping the Watch sales data out of its quarterly report. The company's CEO Tim Cook, who is famously tightlipped about the device's sales numbers, only shared that the wearable set "all-time revenue records" last year. If nothing else, that statement makes the Canalys report a bit more believable, even if it isn't much different from what we've heard from Cook before.
For 2016 on the whole, Canalys estimates Apple shipped over 11.9 million total units, which made up nearly half of the yearly global smartwatch market share. Coming in second was Fitbit, which accounted for 17 percent of the market, trailed by Samsung at 15 percent. All other makers made up the last 19 percent of the market share.
What about this year?
The Apple Watch's dominance is certainly impressive — but it might not be long-lived. Last year was tough for the smartwatch market as a whole, as companies dropped their product lines and the space saw few releases, with only the Samsung Gear 3 to challenge the Apple Watch Series 2.
This year, things will be different, at least in terms of smartwatches on the market. This week will see the release of two LG-branded watches running on Google's Android Wear 2.0, the long-delayed smartwatch OS that could be the best bet to dethrone (or at least slow down) the Apple Watch. More Android 2.0 wearables are sure to follow, as the developers will be looking to take advantage of the platform's first update since 2014.
Fitbit will likely throw its hat in the smartwatch ring this year, too. The activity tracking specialist has declared its intention to release its first true-blue smartwatch in the near future, although no definite timeline has been set. Fitbit's Blaze is technically a watch, but the company will look to include tech from its recent acquisitions of Coin, Pebble and Vector to capture a broader share of casual users.
If anyone can take a piece of Apple's crown, it won't just be because it's fresh on the block. Last year, it was clear that consumers were looking for proof that a smartwatch was really worth the investment. To be successful in 2017, that question will still have to be answered.
