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Apple Inc. (NASDAQ:AAPL) Watch Is Dead, Long Live the Apple Watch 2

Apple Inc. beats music

Apple Inc. failed with the Apple Watch, there’s no doubt about it. The firm failed to meet the forecasts for sales on Wall Street, and a new report is showing that fan interest in the device is taking a fall. That doesn’t mean Apple is going to give up on the Watch, however. The release of a new OS, and perhaps a new version of the hardware, is right around the corner.

Apple Inc. beats music

Steven Milunovich of UBS says that his research shows serious decline in search volume for the Apple Watch since its launch. In a report published on Tuesday the analyst said that the device saw “lackluster interest as measured by global search activity.” He reckons Apple sold just 2.2m units of the device in the three months through June, but he doesn’t think the race is over just yet.

Apple Watch loses steam

Mr. Milunovich says that in the past four weeks search activity for the Apple Watch had been at less than 45 percent of volume for Fitbit. The low-tech competitor to the Apple Watch doesn’t offer nearly as many features as the device from Apple , but it costs a lot less and it offers a niche device to those that demand it.

The slow start for the Apple Watch doesn’t mean that those with Apple shares should give up on the device. UBS says that “as native apps are created and more functionality added over time” sales might jump.

The report noted two positives, including “Cook’s comment that sales ramped in June and NPD’s finding that traditional watch sales were down in June, likely in part due to the Apple Watch.”

Apple Watch OS 2 is on the way

Apple had hardly gotten the Apple Watch out the door when it revealed plans to update the OS on the device to Watch OS 2. The platform is currently being tested and improved on by devs, and it may add a lot of features that users of the Apple Watch demand.

A lot of those that shelled out for the Apple Watch simply don’t know what to do with it, and many who have searched have clearly been turned away by its lack of features.

The Apple Watch is one of the best-selling wearable devices of all time, and it has created a place for Apple to grow in. Just because the first gen hasn’t set the world on fire, doesn’t mean that the category is dead.

Gene Munsterof Piper Jaffray told CNBC on Monday that he was sure the device would be a success. Mr. Munster said “We’re believers the watch will prove to be a success.” He’s also looking for evolution in the OS in order to make users really love the device.

“The real excitement here is when they come out with native apps for the watch,” he told the TV network, “That could change the whole trajectory of how consumers view the watch.”

The slow takeup on the Watch has helped Apple shares fall sharply in recent weeks. Those with shares in the firm aren’t sure that it will be able to make sales and profit grow after the iPhone 6 cycle.

Sherri Scribner of Deutsche Bank says that she expects iPhone sales to be lower than the smartphone market as a whole after the release of the iPhone 7. On today’s market shares in Apple were down strongly. At time of writing shares in the Cupertino firm were selling for 115.25, down 3.74 percent for the day’s trading. 

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