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  • Smartwatches or Wearables: Apple Watch Has it Covered

    March 2nd, 2018

    One way for industry analysts to reduce a company’s share of a specific market is to change the market. At one time, iPads were placed in a so-called media tablet category, as opposed to a Windows tablet which, is of course, used for real work. This put a modestly expensive gadget in the same category as cheap ones, such as Amazon Kindles, and thus make its sales achievements seem less impressive.

    For a time, this scheme seemed to work, as Apple’s market share was much lower. When sales flattened and dipped, the situation became much worse for iPads. Sure, Tim Cook continued to express confidence on the platform, pointing to the conquests in the business world and in China and elsewhere. At the end of the day, sales began to rise again in small increments, and average sales prices increased by somewhat larger amounts because customers preferred the more expensive “Pro” models.

    So what about the Apple Watch?

    Well, from the very first, Apple opted to hide actual sales numbers in an “Other Products” category along with the AirPod, Beats headphones and other gear. The critics felt this was merely Apple’s scheme to hide sales, because they weren’t confident that the numbers would be positive. Or maybe for competitive reasons, even though the numbers have been estimated in ways that appear to be fairly accurate.

    So the latest numbers for 2017 are in the neighborhood of 18 million units, but Apple’s market share depends on the category in which you place Apple Watch. Since you wear a watch, an IDC survey can undercount the impact of sales and revenue by placing it in the “Wearables” category. But isn’t it a smartwatch? On the other hand, isn’t a regular Fitbit a wearable too because you wear it in order to monitor your fitness? Even if it has no watch in the way you’d refer to a device as a watch, it still counts.

    So I won’t quibble.

    Regardless, it appears the Series 3 models, with LTE, closed the deal. Based strictly on IDC, which tends to undercount Apple, sales for the Apple Watch last year totaled 17.7 million, compared to 11.3 million in 2016. That’s an improvement of 55.9%, with sales not much lower than iPhone sales in its third year.

    And, no, I don’t expect people to buy hundreds of millions of Apple Watches in the near future, but I’m not a marketing wizard either.

    In any case, that accounts for a 15.3% share of the amorphous wearables market. China tech giant Xiaomi shipped 15.7 million, very slightly lower than last year. Fitbit’s sales tanked, down to 15.4 million compared to 22.5 million last year. And don’t forget that Apple Watch prices are usually far higher than a Fitbit.

    There’s also a huge “Others” category, totaling 55.5 million that’s spread across a number of smaller makers that have shares below the top five. A number of them appear to be startups with teeny tiny sales numbers. It may be a case of here today, gone tomorrow.

    Regardless, Apple remains the company to beat, but it doesn’t appear that any other smartwatches are making significant gains. Most Xiaomi wearables I caught online appear to be relatively cheap junk and, as I said, sales were a tad lower compared to 2016.

    Outside of the top five are such apparent losers as Samsung Galaxy Gear or any Android Wear product. As much as the critics want to compare Apple to hundreds of other companies, with high double-digit growth, it’s clear that sales are a long way from hitting their peaks. With sales growing that fast — and no solid predictions of what the Series 4 Apple Watch might be like — its potential has clearly yet to be realized.

    And any company that can sell nearly 18 million of anything has to be respected. How many Surfaces does Microsoft sell each year? Pixel smartphones? Amazon Echo Dots, starting at $50? Is an Apple Watch, starting at $249 for the legacy Series 1 version, overpriced, or pretty much what you’d expect given all the technology it contains? Are lots of people rejecting such a device because it’s not $99?

    Well, despite all the fake news about price resistance, the iPhone X fueled a huge rise in the average sale price for these products, despite the fact that you can buy a perfectly decent iPhone, the SE, for $349 and that might even be cheaper this fall if the trends continue.

    This certainly doesn’t mean the Apple Watch is everyone’s cup of tea, or an essential gadget. It is still basically an iPhone accessory even though the LTE feature, the ability to access cellular data, makes it more independent.

    While I expected an LTE option, it came earlier than I thought. If Apple can add more powerful features, reduce power needs, and maybe find a better battery solution to fit into that small space, I can see where more and more people might just leave their iPhones at home and do more things with their smartwatch.

    Then again, I’m not in that category yet. Although I see more and more Apple Watches in my travels, I have yet to feel tempted in any way to retire my three-year-old $12.88 Walmart stainless steel watch. It’s nowhere near as perfect as Apple’s solution, and the only extra feature it contains is a semi-automatic calendar (meaning it has to be set manually for months shorter than 31 days). It also gains a few seconds a month, but I’ve tolerated imperfect wristwatches for years. Maybe someday, if a long-lost relative is feeling generous for birthday or holiday giving.



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