Warning signs may be starting to flash yellow for Apple, at least when it comes to wearables, including the Apple Watch and AirPods. According to a report by IDC, a market research company, global shipments of wearable devices grew by 8.8% year-on-year, but Apple specifically fell by 18.9%. That includes a 19.1% drop in Apple Watch shipments and an 18.8% drop in wearable audio products like AirPods and Beats.
In second place behind Apple is Xiaomi, which is up 43.4% year-on-year and looks to have recovered well from a 16% decline in the first quarter of 2023. It is followed by Huawei in third place. Global growth appears to be largely driven by smaller and lesser-known manufacturers with more budget offerings, with bigger names like Samsung slipping to fourth place.
“Lack of major innovations in the premium segment has allowed tier 2 brands to close the gap across the board,” said Jitesh Ubrani, Research Manager, Worldwide Mobile Device Trackers. “Until we get to a point where new sensors or algorithms enable prescriptive insights or tracking new data points like blood pressure or glucose, consumers will likely gravitate toward mid-to-value price points, and that’s where brands continue to invest by diversifying their price ladders.’
One notable winner is Indian brand Imagine Marketing, which is known for its budget products. It grew audio products by 17.5%, although smartwatches declined by 61.3% due to strong competition in the Indian market.
“It’s important to pay close attention to smaller, regional vendors,” said Ramon T. Lamas, director of research in IDC’s wearables team. “Appetite for wearables has not been lost in emerging markets, but the higher prices of wearables from premium brands make them unaffordable for many. This has opened the door for local brands to introduce low-cost yet feature-packed devices to meet this voracious demand. This is how companies like Xiaomi and Imagine Marketing have established positions among the best suppliers globally.”
This decline from Apple is despite overall growth in global wearable device shipments, with 113.1 million units shipped. However, fortunately for Apple, it is still at the top of the market share despite the declines, and it is possible that the company will recover quickly. According to IDC, Apple has been affected by poor macroeconomic conditions, the temporary ban on certain Apple Watch models and the lack of newer AirPods.
For Apple, while the drop in shipments isn’t ideal, we could see it quickly reversed depending on what Apple announces next year. One of the rumors was about the Apple Watch X, a major redesign of the Apple Watch with a new form factor, blood pressure monitoring, blood sugar monitoring and other features. Of course, it won’t be a cheap product if it includes all of that, so it’ll likely sit somewhere close to the Apple Watch Ultra 2 in price, meaning Apple won’t be making big inroads into the more affordable wearable segment
To that end, Apple may have to drop the price of the Apple Watch SE, which is the company’s most affordable smartwatch at $249, but is still an exorbitant amount in many emerging markets. Of course, Apple has never been very keen on competing in the ultra-budget segment of the market, so we wouldn’t count on a significant price cut or even a more affordable model than the existing SE.
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