Last year, the original Apple Watch was in the market only for eight months, but it sold an impressive 10.4 million units in 2015. This year is the first time Apple’s wearable device will be on the market for a full 12 months. That, coupled with the launch of Apple Watch Series 2, would make many believe that Apple’s wearable sales in 2016 could be significantly higher than in 2015.
That’s not going to be the case, says the world’s most respected Apple analyst. KGI Securities analyst Ming-Chi Kuo said in a research note to investors (via Apple Insider) that the Apple Watch Series 2 sales will not be strong enough to reverse the decline in overall Apple Watch sales this year. Even price cut for the refreshed first-generation model Series 1, which packs a more powerful processor now, won’t boost sales.
Apple Watch Series 2 suffers from four major issues
Kuo has slashed his 2016 Apple Watch shipment estimates by 15% to 25%. The analyst raised shipment estimates for Apple Watch Series 2 by 10%, but that won’t be enough to make up for the decline in Series 1 sales. Ming-Chi Kuo has revised his Apple Watch shipment estimates from 10-10.5 million units to 8.5-9 million units. It indicates that Apple Watch sales are still driven by the hardcore Apple fans rather than by the mass market, said Kuo.
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Ming-Chi Kuo’s belief is in line with pre-order data from Slice Intelligence, which showed that about one-third of Apple Watch Series 2 pre-orders came from the owners of first-gen Apple Watch. The KGI Securities analyst believes that Apple’s tie-ups with the likes of Nike and Hermes are unlikely to boost demand.
KGI Securities told investors that the new Apple Watch Series 2 suffers from four critical issues: lack of “killer” applications, heavy reliance on the iPhone, weak battery life, and a multi-touch UI that is not ideal for wearable devices. Though the health and fitness tracking capabilities could be described as killer applications, battery life is almost unchanged from the previous version.
Apple Watch yet to affect the sales of Fitbit
Apple Watch Series 2 lacks cellular connectivity, so you still have to rely on the iPhone for most functions. Ming-Chi Kuo said the Apple Watch had failed to eat into the sales of Fitbit, which continue to thrive in the second half of 2016. It is yet another indication that Apple’s wearable device has failed to live up to the expectations.
It’s worth pointing out that Apple does not reveal the sales performance of its Watch line. The Apple Watch revenues are lumped in with Apple TV, Beats, iPods, and other accessories. Therefore, all estimates are based on third-party data.
Apple Watch Series 2 looks similar to its predecessor, but comes with GPS, enhanced waterproofing, a faster processor, and a brighter display.