At 3.5 million units shipped, Apple sold 30 percent more watches than it did a year ago during the second quarter of 2017, with the difference being the availability of the Apple Watch Series 3 with LTE connection, a feature that likely spurred many customers to upgrade or purchase one of the watches for the first time.
Apple's LTE Apple Watch was especially popular in Asia, accounting for 60 percent of the 250,000 units that were shipped to the region. The Apple Watch Series 3 with LTE was the best-shipping smartwatch in Asia in Q2 2018, according to Canalys.
While Apple's shipments were up, the company's share of the smartwatch market dropped to 34 percent from 43 percent in the first quarter of 2018. Canalys attributes this to competition in the smartwatch market, including strong performances from Fitbit and Garmin.
Total global smartwatch shipments reached 10 million units during the second quarter.
Apple faces a growing threat from competitors, which have started to pass the million quarterly shipments mark," said Canalys Research Analyst Vincent Thielke. "Vendors are trying to differentiate their products with advanced heart-rate metrics, smart coaching and mapping, and consumers now have a much wider range of smartwatches to choose from than they did a year ago. Amid further competition from Samsung and Google, rumored to be launching Galaxy and Pixel watches respectively, Apple needs to work out how to drive refreshes in markets such as the US, where its penetration into the existing iPhone installed base has started to level off."Canalys' Apple Watch shipment numbers are estimates, as Apple does not report the number of Apple Watches that it has sold and specific numbers are not available. Apple Watch sales are lumped into the company's "Other" category, which also includes AirPods, Apple TV, HomePod, Beats products, iPod touch, and other Apple-branded and third-party accessories.
Last quarter, Apple CEO Tim Cook said that the Apple Watch saw strong revenue growth "in the double digits," setting a March quarter revenue record. Apple plans to report its fiscal third quarter earnings results next week, which should give us a bit more insight into the performance of the Apple Watch from April to June.
As Canalys points out, with Apple facing competition from other vendors, updates to the Apple Watch are needed. Apple has not changed the design of the device since it was introduced in 2015, but this year, rumors suggest it will feature a larger display (1.57 inches and 1.78 inches) perhaps implemented through a reduction in bezel size, a higher-capacity battery, and enhanced heart rate detection features.
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