While Kantar Worldpanel recently stated that Apple is dominating the smartwatch market with the Apple Watch, famed Apple analyst Ming-Chi Kuo of KGI Securities said that the wearable device will see a decline in sales for this year.
According to Kantar, the Apple Watch held a 33.5 percent market share in the smartwatch industry of the United States over the three-month period ending in July. With the release of the Apple Watch Series 2, Apple's market share is expected to further increase.
Amid the possibilities of claiming a bigger slice of the United States smartwatch market, Kuo wrote in a note to investors that shipping estimates for the Apple Watch has been reduced by 15 percent to 25 percent, including both the Series 1 and Series 2 models.
Overall, Kuo estimates sales figures of 8.5 million units to 9 million units for the entire Apple Watch line this year, compared with the previous estimate of 10 million units to 10.5 million units. The new estimate is in comparison with the 10.4 million units of the smartwatch that were shipped during the eight months that it was available last year.
While Kuo raised shipping estimates for the Apple Watch Series 2 by less than 10 percent, the figure is not high enough to offset the projected slowdown on sales for the Apple Watch Series 1.
The Apple Watch Series 1, which has received a price cut, now has a better S2 SiP processor, revealed at the same time as the announcement of the Apple Watch Series 2. The new model of the smartwatch comes with a swim-proof chassis, a brighter display and new components such as a GPS radio and a faster processor.
The updates that Apple made on the second version of the Apple Watch, however, failed to solve the main problems of the wearable device. According to Kuo, these issues are the lack of a killer app that elevates the Apple Watch into a necessity, the inadequate battery life, the heavy reliance of the smartwatch on the iPhone and the likelihood that multi-touch does not present the best user interface solution for wearable devices.
The last issue that Kuo noted, however, is interesting because multi-touch input is not yet supported by Apple Watch. The analyst could be referring to the possibility of bringing the technology to the device, a move which he claims would not be a good one for Apple.
It is possible that Apple could continue to increase its market share, but also see lower sales figures, as consumers realize that smartwatches are not really must-have devices. The lack of a killer application is not just a problem for the Apple Watch, but for the industry in general, and companies need to solve that problem if they want to tap into the potential of the market.
