Thursday, June 20, 2024

Is the Apple Watch in trouble?

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Someone wearing an Apple Watch Ultra 2, showing the Modular Ultra watch face.Joe Maring / Digital Trends

Warning signs may be starting to flash yellow for Apple, at least when it comes to wearables, including the Apple Watch and AirPods. According to a report from IDC, a market intelligence company, worldwide shipments of wearables grew by 8.8% year over year, but Apple specifically is down by 18.9%. This includes a 19.1% decline in Apple Watch shipments and an 18.8% decline in wearable audio products like AirPods and Beats.

In second place after Apple, we have Xiaomi, which had 43.4% year-over-year growth and seems ton have recovered nicely from the 16% decline in the first quarter of 2023. It’s followed by Huawei in third. Global growth seems largely driven by smaller and lesser-known manufacturers with more budget offerings, with bigger names like Samsung slipping to fourth place.

Top 5 wearable device companies. IDC

“The lack of major innovation in the premium segment has allowed tier-2 brands to narrow the gap across the board,” said Jitesh Ubrani, research manager, Worldwide Mobile Device Trackers. “Until we get to a point where new sensors or algorithms enable prescriptive insights or the tracking of new datapoints such as blood pressure or glucose, consumers will likely gravitate toward the mid to value price points,and this is where brands have continued to invest by diversifying their pricing ladders.”

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One notable winner is the Indian brand Imagine Marketing, which is known for its budget products. It’s grown audio products by 17.5%, though its smartwatches declined by 61.3% because of stiff competition in the Indian market.

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“It’s important to pay close attention to smaller, regional vendors,” said Ramon T. Llamas, research director with IDC’s Wearables team. “The appetite for wearables is not lost on emerging markets, but higher prices on wearables from premium brands make them cost-prohibitive for many. That has opened the door for local brands to introduce low-cost, yet feature-laden devices to meet this unsatiated demand. That’s how companies like Xiaomi and Imagine Marketing have established positions among the top vendors worldwide.”

This decline on Apple’s part is despite the overall growth of global wearable shipments, with 113.1 million units shipped. However, fortunately for Apple, it is still at the top of market share despite declines, and it’s possible the company will recover quickly. According to IDC, Apple is being impacted by poor macroeconomic conditions, a temporary ban on certain Apple Watch models, and the lack of newer AirPods.

Top five wearable companies in terms of market share. Image used with permission by copyright holder

For Apple, while a decline in shipments isn’t ideal, we may see it reversed quickly depending on what Apple announces in the coming year. One of the rumors has been about the Apple Watch X, a major redesign of the Apple Watch with a new form factor, blood pressure monitoring, blood glucose monitoring, and other features. Of course, this wouldn’t be a cheap product if it included all that, so it would likely sit somewhere near the Apple Watch Ultra 2 in price, meaning that Apple won’t make major inroads into the more affordable wearable segment

For that, Apple may need to reduce the price of the Apple Watch SE, which is the company’s most affordable smartwatch at $249, but still a princely sum for many emerging markets. Of course, Apple has never been very keen on competing in the ultra-budget segment of the market, so we wouldn’t count on a major price cut or an even more affordable model than the existing SE.

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