Apple will sell fewer smartwatches in 2016 than it did last year

By Rob Thubron on October 4, 2016, 9:30 AM


Respected KGI Securities analyst Ming-Chi Kuo has a history of making accurate predictions regarding Apple products, but the iPhone maker will likely be hoping his latest estimates prove wrong. Kuo believes the company will sell fewer Apple Watches this year than it did in 2015.

Kuo had predicted that Apple would ship between 10 million to 10.5 million Apple Watches in 2016. The figures includes both the original Series 1 model and the recently released Series 2.

But in a note to investors obtained by Business Insider, Kuo revised his estimates. He now believes that 8.5 million to 9 million Apple Watches will ship by the end of the year – a drop of 15 to 25 percent from his original prediction. He has, however, raised shipping estimates for the Apple Watch Series 2 by 10 percent, though this isn’t enough to stop the overall sales figure from decreasing.

Apple hasn’t revealed how many of its original wearables have sold since they launched in April last year, so estimates tend to vary wildly. Kuo believes 10.4 million units shipped during the eight months the Apple watch was available in 2015, meaning fewer units are predicted to sell in 2016 - despite the longer selling time.

So why the pessimistic outlook from Kuo? He identifies four main reasons why the smartwatches aren't selling as well as Apple hoped. Like similar devices, the lack of a “killer” app and a poor battery life are major issues for many consumers. Kuo also identifies a reliance on

the iPhone and the likelihood that multitouch isn’t the best UI for wearables as problems.

Another reason why the Apple Watch 2 hasn’t made a huge impact on total wearable sales is probably due to its similarity to its predecessor. Other than its waterproofing, GPS, faster processor, and brighter display, the new device doesn’t differ enough from the first Apple Watch to compel most people to buy one.

“Sales of the new Apple Watch models are indeed driven by hardcore Apple (US) fans, first-generation replacement demand and niche demand, rather than by the mass market,” said Kuo.

With LG, Motorola, Huawei, and Microsoft all stepping back from the smartwatch business, is the industry in serious trouble? A lot may depend on the success Samsung’s upcoming Gear S3, which was one of our picks of IFA 2016.