Apple drew some pointed questions this week following CEO Tim Cook’s vague response to reports suggesting Apple Watch demand has plummeted.
The Apple Watch is on track to set a holiday sales record and post its best quarter ever, Cook told Reuters.
Sell-through of the watch — that is, units sold to consumers and not just stocked on retailers’ shelves — also is on track to reach a new high, he said.
Cook’s comments appeared to counter IDC’s latest figures, which indicate that Apple sold just 1.1 million units of the smartwatch during the third-quarter 2016, a 71 percent drop from a year earlier.
However, Cook declined to provide specific numbers to back up his assertions when asked.
The Apple Watch Series 2 made its debut in September, positioned as a sophisticated smartwatch with strong fitness capabilities. It includes a dual-core processor, a brighter display, and a built-in GPS that can operate independent of a phone. It has a 50-meter rating for water resistance.
Reporting Methodology
Cook apparently was relying on completely different numbers than those IDC used in its report, said Jitesh Ubrani, senior research analyst for worldwide mobile device trackers at IDC.
The firm stands by the figures in its report, he told the E-Commerce Times, noting that “there’s a clear difference in methodology.”
The overall wearables market grew 3 percent during the third-quarter to reach 23 million shipments, according to the report. Basic wearables — that is, fitness bands — experienced double-digit growth, accounting for 85 percent of sales in the category.
Apple’s decision to launch its new smartwatch in September contributed to the overall decline in Apple Watch sales, the report notes. The main issues affecting the drop were an aging lineup and unintuitive user interface.
“Apple’s success will likely be muted as the smartwatch category continues to be challenged,” the report states.
Apple ranked fourth in the overall category, behind Fitbit, Xiaomi and Garmin.
The dispute comes at a sensitive time for the overall wearables market, with Fitbit having just agreed to acquire struggling smartwatch maker Pebble, reportedly for US$40 million.
“We’re seeing a lot of companies face issues in this market for various reasons,” Ubrani said.
Need for Transparency
Many customers held off on making an Apple Watch purchase in anticipation of the holiday season, as the product didn’t hit stores until October, said Kevin Krewell, principal analyst at Tirias Research.
Further, due to the lack of clear guidance from Apple, IDC has to rely a great deal on other factors in making its calculations, he told the E-Commerce Times.
“The problem with the IDC report is that it attributed the slow Apple Watch sales to a systemic shift in the market to cheaper fitness products, and not a product cycle,” Krewell said. “Because Apple is not transparent on Watch sales in its financial reporting, IDC has to make estimates based on models, channel checks and other retail partner sales.”
Without direct input from Apple, there can be a lot of error in the IDC figures, he said.
On the other hand, uncertainty about the viability of the smartwatch form factor persists.
Smartwatches will see limited success within the overall wearables category, said Eric Schiffer, CEO of The Patriarch Organization.
Apple is trying to divert attention from the failure of its own product to find an audience, he told the E-Commerce Times.
“Apple is trying to run a classic Vegas magician’s misdirect trick by attacking IDC and by inferring they have stronger demand,” Schiffer said. “The Apple Watch has been a terrible failure and still has Steve Jobs spinning in his grave.”
Show Me the Data
The controversy appears to be over little more than an outside firm’s independent research failing to cater to corporate interests, observed Charles King, principal analyst at Pund-IT.
“IDC is often vilified when the results of its research run counter to a company’s marketing strategy or preferred narrative,” he told the E-Commerce Times. “Tim Cook’s comments simply make him one of a legion of similarly disappointed CEOs, but the stark reality of IDC’s findings are particularly troubling, given the newness of the smartwatch category.”
IDC does a service to the industry and consumers by putting out its findings for all to see, King said, adding that he has a great deal of respect for the firm’s analysts.
“If Cook disagrees, he has the power to shut up IDC by meticulously detailing the Apple Watch’s market and sales performance,” he pointed out. “If he fails to do so, it will say as much about Apple as it does about IDC’s market research.”
Apple did not respond to our request to comment for this story.
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"The main issues affecting the drop were an aging lineup and unintuitive user interface".
Bingo on the latter. David Pogue, no Apple-basher, brilliantly dissects the user interface problems of the Apple Watch and even more brilliantly offers a fix. He specifically abjured all rights to it, so Apple should actually follow his suggestion.
See it here:
http://pogueman.tumblr.com/post/129285667457/a-humble-proposition-how-to-fix-the-apple-watch
Yeah, I have an Apple Watch (series 1) and it is good and bad.
Let’s start with the bad, it is always black and only activates sometimes when I raise my wrist. Useless as a fitness watch since when running I always get a black screen. Also, it has o b charg s once a day – the battery may last 1.5 days if you are lucky, but sometimes the charger doesn’t connect and it didn’t charge. At nighttime, when recharging it can stay on for minutes and keep the room shining with the green light.
On the good side. It is great for answering phone calls, especially when driving or riding, And I use it for directions with Siri. But the Siri cannot understand half the words like -Woy Woy or Ning, And if I say to Siri text Fred "be there soon", it only gives a don’t send button.