As last year’s holiday sales were ramping up, Apple Inc. (NASDAQ:AAPL) faced claims that its Apple Watch was in trouble. Smartwatch sales were down — with AAPL doing worse than most — and some analysts were calling for a miserable Q4. Apple CEO Tim Cook even took the unusual measure of speaking to the press to claim Apple Watch sales were actually off the charts.
However, IDC just released its numbers for Q4 wearables, and it looks like Apple was right. It booked its best Apple Watch Q4 numbers to date.
Fitbit Inc (NYSE:FIT), on the other hand, didn’t do so well.
The IDC Numbers on Q4 2016 Wearables Sales
IDC just released its numbers for Q4 2016 wearables sales. This covers both fitness trackers and smartwatches. Overall sales were up 16.9% year-over-year with 102.4 million wearable devices being shipped during the quarter, worldwide.
The firm noted a continuing trend toward smartwatch makers adopting an activity tracking approach, while traditional fitness tracker makers — like Fitbit — scrambled to add features, becoming multi-use devices.
The results for the quarter show that Apple’s strategy of making its second generation smartwatch even more fitness focused paid off, with record Apple Watch sales.
IDC had this to say:
“Apple Watch Series 1 and Series 2 proved to be a magnificent success for the company as it was the company’s best quarter ever in the wearables market. The lower entry price point and the inclusion of GPS on the Series 2 along with a completely revamped user interface have helped the company grow its presence. Apple is one of the few companies that has been able to quickly refocus its watch to gain traction in the consumer market and has also been leading the charge on introducing the smartwatch category to the commercial segment.”
Fitbit, on the other hand, had a miserable quarter. Its smart wearables like the Blaze weren’t enough to fend off the Apple Watch.
The U.S. market (where its marketing is focused) is approaching saturation for basic fitness trackers. China’s Xiaomi cranked out cheap fitness trackers and added new more upscale models with features like heart rate tracking.
As a result, for Q4 Apple Watch sales were up 13% (to 4.6 million units for the quarter) and Xiaomi was up 96.2% (5.2 million units). Fitbit maintained its first-place position, but sold just 6.5 million units, a 22.7% drop compared to last year.
Q4 Smartwatch Sales Show AAPL’s Fitness Focus Paying Off
The IDC numbers vindicate Apple CEO Tim Cook’s comments in December. Speaking in response to a a report (from IDC, ironically) that suggested the smartwatch category was in trouble and the Apple Watch would face “muted” success, Cook responded:
“Our data shows that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year. Sales growth is off the charts. In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product’s history. And as we expected, we’re on track for the best quarter ever for Apple Watch.”
That comment was looked at with some suspicion at the time. It seemed a little defensive and vague.
The Apple Watch series 2, launched in September, featured a renewed focus on fitness and activity, including a built-in GPS that freed it from the smartwatch for running. A partnership with Nike Inc (NYSE:NKE) resulted in the Apple Watch Nike+ aimed offered sports enthusiasts.
At the same time, Apple tweaked the performance of the Apple Watch and has continually improved its watchOS operating system.
With record Q4 Apple Watch sales that exceeded the numbers from its launch year –when excitement about the all new smartwatch was running high– AAPL’s strategy is clearly paying off. And contrary to that earlier IDC report from last year, the Apple Watch is enjoying better than “muted” success.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
