Sales of the Apple Watch more than halved in the second quarter, with the new figures from researcher IDC suggesting that chief executive Tim Cook’s first major product is failing to live up to expectations.
The sharp decline is highly unusual for a new Apple product so early in its life and will compound Wall Street concerns about the company’s overall growth prospects this year. The iPhone posted nine years of uninterrupted growth from its launch in 2007 until the first quarter of this year, when unit sales fell by 16 per cent to 51m.
IDC said on Thursday that Apple had sold 1.6m of its watches in the second quarter of 2016, down 55 per cent compared with the 3.6m in the same period last year.
The drop dragged down the entire smartwatch market despite rapid growth from Samsung, up 51 per cent to 0.6m watches, and Lenovo’s Motorola brand, up 75 per cent to 0.3m.
“Despite a down quarter, Apple remains far and away the market leader in smartwatches,” said IDC analyst Ramon Llamas, with traditional watchmakers such as Casio, Fossil and Tag Heuer’s recent attempts to break into the wearable-tech market having made a limited impact so far.
Apple’s lead has, however, fallen from 72 per cent a year ago to 47 per cent today.
“Every vendor faces similar challenges related to fashion and functionality, and though we expect improvements next year, growth in the remainder of 2016 will probably be muted,” Mr Llamas added.
Apple has not released any sales figures for the Watch since it first went on sale in April last year. Analysts have estimated that it sold 12m units in its first year, more than the iPhone during its initial 12 months on sale, but below many observers’ initial expectations for the first launch into a new hardware category since Tim Cook took over as Apple’s chief executive.
Apple declined to comment on IDC’s figures, ahead of its earnings report next week. The Watch, a revamped Apple TV and new Apple Music service have so far failed to offset the declines in iPhone and iPad sales, which Tuesday’s figures are expected to show have continued in recent months.
IDC said that customers were holding off buying Apple Watch, despite discounting by retailers, as they waited for an updated model. Apple is expected to launch a new Watch with a faster processor later this year.
In June, it previewed WatchOS 3, a software update that addresses some of users’ common complaints in how long it takes apps to load and other usability issues. It also added a new app called Breathe which uses the Watch’s sensors to guide wearers through deep-breathing sessions.
Jeff Williams, Apple’s chief operating officer, said that the software updates “make it feel like a whole new watch”, a comment seen by some analysts as an admission of the shortcomings of the original Watch.
In March, Apple cut the starting price of the Watch by $50 to $299 for the basic Sport model. Since then, retailers such as Best Buy and Target have offered promotions that have cut as much as $200 from other versions of the Watch, in an attempt to encourage buyers.
Despite the sales slowdown, earlier this month Apple Watch ranked highest in JD Power’s smartwatch customer satisfaction ratings, a metric that the iPhone maker often highlights in earnings calls.
Common complaints about smartwatches include short battery life and users’ difficulty in configuring them to personal preferences, the research group found.
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