Apple Watch shipments plunge 70% as consumers favor simpler wearables, IDC says

The Apple Watch displayed in an Apple Store.
Andrew Kelly | Reuters

Despite the release of a zippy new model, the Apple Watch may be doomed for tepid sales, based on new data.

Eight-five percent of the wearable technology market is comprised of "basic" devices that don't run third-party apps, according to quarterly data from the International Data Corporation (IDC). Simple wearables saw double-digit growth during the third quarter, IDC said, but when smartwatches were added to the mix, the market grew only 3.1 percent from a year ago.

That was bad news for Apple, who saw wearable shipments fall 71 percent year-over-year in the quarter, to 1.1 million units. Apple does not break out its Apple Watch sales.

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The results are somewhat expected, since the release of the company's highly-anticipated Apple Watch Series 2 was near the end of the quarter, and consumers may have waited to make their purchase. But the trend toward simpler wearables may not bode well for Apple's new device headed into the holiday season, IDC said.

"The primary reasons for the downturn were an aging lineup and an unintuitive user interface," IDC said. "Though both issues have been addressed with the latest generation watches, Apple's success will likely be muted as the smartwatch category continues to be challenged."

Apple was the only major wearable vendor to see a decline in growth, bested by Samsung, Fitbit, China's Xiaomi and Garmin, according to IDC. But that doesn't mean others have unlocked the market, either.

Xiaomi's market share eroded as it failed to make inroads outside of China. Fitbit, meanwhile, has seen its shares fall 45 percent over the past 6 months, after giving fourth-quarter guidance that was well below estimates. Samsung's share of wearables was also boosted by one-time bundling it with its phones.

Fans of the Apple Watch, like former Apple executive Jean-Louis Gassée, have said that Apple's playing the long game, continuously improving an aspirational product. Still, while Apple has focused on upgrading its technology — adding a brighter display, dual-core processor and water resistance — it doesn't have many lower-end options for impulse buyers, IDC notes.

"It's still early days, but we're already seeing a notable shift in the market," Jitesh Ubrani, senior research analyst at IDC said in a statement. "Where smartwatches were once expected to take the lead, basic wearables now reign supreme. Simplicity is a driving factor and this is well reflected in the top vendor list as four out of five offer a simple, dedicated fitness device. Meanwhile, from a design perspective, many devices are focusing on fashion first while allowing the technology to blend in with the background."