Apple Inc. (AAPL) Stumbles in Booming Wearable Market, Share Drops 56.7%

Apple Inc (AAPL) Apple Watch

Apple Inc.’s share in the global wearable market dropped more than 50% during the second quarter compared to the same period last year, according to the International Data Corporation (IDC). Fortune reported that the company’s share of wearable devices shipped fell to 7%, or 1.6 million, from 20.3%, or 3.6 million, according to the IDC report.

Apple Watch

Apple released the first version of the Apple Watch in September 2014. The tech giant is expected to reveal the updated Apple Watch alongside the iPhone 7 at its product launch event on Wednesday. The company previewed WatchOS 2, its newest operating system for the Watch, at the Worldwide Developers Conference in June. However, the company did not disclose any unique features.

Apple Inc. (NASDAQ:AAPL) Watch

Data gathered by the IDC shows that Apple was the only company among the market leaders to post a year-over-year decrease in shipment volumes, primarily because it did not launch a new model on the anniversary of its first generation Watch.

Reports suggest that the Apple Watch 2 will boast a new appearance, be less dependent on the iPhone, and crammed with a number of new, distinct and useful features. The Watch is likely to get a GPS system. Still, it’s not clear whether the Watch will get a camera.

The Apple Watch accounts for about 2% to 3% of the company’s revenue. But the device is still an important thing for investors who want more than just the iPhone from the tech giant. Investors are very interested to see what changes Apple has made in the new Apple Watch, and whether the company can grow its wearable product category to significant levels.

Wearable Devices Market Grew 26.1% YoY

IDC said in a statement that shipments of wearable devices hit 22.5 million in the second quarter of 2016. Overall, the wearable devices market grew 26.1% year over year.

“Fitness is the low-hanging fruit for wearables,” Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, stated. “However, the market is evolving and we’re starting to see consumers adopt new functionality, such as communication and mobile payments, while enterprises warm to wearables’ productivity potential.”

IDC divided the wearable market into two categories: basic and smart wearables.

Basic wearables – devices that don’t support third party applications – grew 48.8% from 2Q15 levels, while smart wearables – devices supporting third party applications – declined 27.2% year over year.

Basic wearables accounted for 82.8% of all wearable devices shipped during the second quarter.

“Basic wearables, which include most fitness trackers, have benefited from a combination of factors: a clear value proposition for end-users, an abundant selection of devices from multiple vendors, and affordable price points,” stated Ramon Llamas, research manager, Wearables.

Llamas noted that smart wearables are “struggling to find their place in the market.”

“There is plenty of curiosity about what smart wearables – particularly smartwatches – can do, but they have yet to convince users that they are a must-have item. The good news is that smart wearables are still in their initial stages and vendors are slowly making strides to improve them. But this also means that it will be a slow transition from basic wearables to smart wearables,” the analyst said.

The current leader of the wearable market is Fitbit, which shipped shipped 5.7 million devices in the second quarter of 2016. Chinese electronics maker Xiomi is the second biggest wearable device shipper.

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