How Apple Watch Can Gain Wearables Market Share in 2016

By Markets Fool.com

Though Apple has yet to reveal specific sales results, that hasn't prevented pundits from estimating sales figures for the new-ish Apple Watch, which first became available for order in April of last year. Now in its third quarter of widespread availability, the device has apparently received a relatively tepid response from consumers.

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The wearable hasn't been a bust by any means, but after an initial rush from iFans, it appears that "little" guys like fitness band king Fitbit still rule the roost. However, based on a recent survey of Internet users, not only is the wearables market expected to skyrocket again this year, but it could be smartwatches like Apple's that lead the way.

Survey says
The Consumer Technology Association (CTA) recently conducted a survey of 1,001 Internet users and asked them how many planned to purchase health or fitness technology in 2016. The good news for the Apples and Fitbits of the world was that 74% said they intend to.

The CTA's estimates could prove fairly accurate, given that eMarketer expects the wearables market as a whole to jump more than 60%, from the estimated 39.5 million devices sold in the U.S. in 2015 to nearly 64 million this year. Of course, much of the wearables sales growth is occurring thanks to consumers' desire for health and fitness trackers, which plays right into Fitbit's hands. CTA's data, though, puts an interesting spin on Fitbit's current reign as the king of wearables.

Of those consumers surveyed who said they plan to buy health or fitness technology in the next 12 months, the largest portion -- 35% to be precise -- said they would choose a full-function smartwatch, while "just" 27% expect to opt for a health and fitness device, which would encompass those offered by Fitbit and its rivals. In the remaining categories of the survey, 30% said they were planning to purchase apps, 27% were eyeing smart apparel, and 23% had sleep trackers on their list.

Back to the future
Apple, of course, isn't the only company selling a smartwatch, but a couple of arrows in Apple's Watch quiver heading into the new year are its recently released OS update, and the rumor that 2016 some have suggested early this year could see the introduction of the Apple Watch 2.

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The OS update in Octoberwas particularly intriguing because it makes it easier for third-party app developers to expand the Apple Watch's capabilities, improves the device's performance, and most importantly, makes it less dependent on iPhones. The more independent functionality the Watch is able to offer, the better the chances Apple will be able to dethrone Fitbit from its perch atop the wearables market. FitBit was No. 1 in the worldwide wearables market with 22.2% market share in Q3, according to IDC, while Apple trailed at No. 2 with 18.6%.

As for the rumored Apple Watch 2, not only will that device likely include even more updates and improved stand-alone functionality, but, let's face it, anything new from Apple will immediately grab the attention of iFans, providing an initial sales boost, just as the first Watch iteration did.


You will find more statistics at Statista

Still an uphill climb
As the third quarter's estimated wearables sales results made clear, Fitbit is still the market sales leader, and by a fairly large margin. Fitbit sold more than twice the number of bands as it did in Q3 2014, jumping from last year's 2.3 million units to 4.7 million, according to IDC data.

Of course, Apple didn't have a production-ready wearable on the market in Q3 2014 to allow for direct comparisons, but Watch sales did show a slight sequential sales bump from its introductory quarter, when an estimated 3.6 million were sold, to an estimated 3.9 million in the third quarter. Apple being Apple meant that a quarter-over-quarter sales increase of just 300,000 disappointed many investors, which at least partially explains its double-digit decline in share price over the past month.

But as per the estimates of the CTA and eMarketer for what's coming in the world of wearables, a lot could change this year. Will 2016 prove to be the year that Apple unseats Fitbit as the wearables leader? The competition may be tough given Fitbit's entrenched position, but with improved independent functionality, the outlook for more and better apps on the horizon, and rumors of a Watch 2 imminent, Apple's plans to dominate wearables are poised to take a big step forward in 2016.

The article How Apple Watch Can Gain Wearables Market Share in 2016 originally appeared on Fool.com.

Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.