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KGI forecasts Apple Watch shipments will fall 25% year-on-year, be below 7.5M units vs. 10.6M in 2015

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A KGI investment note seen by 9to5Mac suggests that Apple Watch shipments will fall by more than 25% this year. The note estimates 2015 sales at 10.6M units, and predicts that full-year shipments this year will be below 7.5M units. The fall would be even more dramatic in real terms, as it would be comparing 12 months of sales in 2016 against 8 months of sales last year.

The company cites two reasons for the forecast. First, that the wearable device market is still a fledgling one, not yet mature in terms of behaviour. But KGI’s Ming-Chi Kuo also believes the Watch itself falls short …

Kuo argues that the device lacks killer applications as yet, and the form factor has room for improvement. He also believes that the limited battery life and reliance on the iPhone for functionality are holding back demand.

KGI expects mass-production of the next Apple Watch to begin in the third quarter of this year, suggesting a likely launch alongside the iPhone 7, with better connectivity among the improvements. However, KGI believes this will effectively be an ‘S model’ refresh, with little change to the form factor.

The analyst believes that demand may improve on the back of a new design in 2017.

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Comments

  1. applegetridofsimandjack - 8 years ago

    Like I said before, Apple Watch was released to soon I think. And the stories which leaked last year back it up, Apple engineers said that Apple Watch initially was meant to have many more sensors and that due to their inaccuracies, Apple dropped those sensors. A good decision because you don’t want anyone to start thinking they are diabetic while they are not.

    Despite having all those features missing because of this, Apple still launched the product. And it was too soon I think, there just aren’t enough features and it really feels the product was rushed to market.

    Anyway Apple Watch will be great and will save lives in the future when those sensors will be added and will be accurate enough because surely Apple’s plan is to allow the user to share jis medical data with his doctor so the doctor can always keep an eye on his patient’s health.

    • taoprophet420 - 8 years ago

      I think a health tracking device will be superset from the Apple Watch. They have the great HealthKit, ResearchKit and the health app but no device to take advantage of them. Battery life needs greatly improved or a completely different form factor more like a band without a color screen or a much lower power flexible OLED is needed for a true health device.

    • iSRS - 8 years ago

      I agree with your overall thesis, that  WATCH 1 was a little early. But, like other devices before it, a first gen device provides invaluable information that improves the future devices. I have at least 1 of every current Apple product line. But I don’t have an  WATCH yet. And likely will be waiting for gen 3, as I did with the iPad.

      Watches are not something people are going to replace that often, either, so it won’t have a pattern to upgrade cycles.

      As far as form factor, aside from a round face, what more are you going to do? That whole “S” cycle comment is typical analyst BS. Sounds like they are saying something knowledgeable when it is really a “no kidding, a watch is going to look the same?”

      • taoprophet420 - 8 years ago

        I usually wait 3-4 generations in to get Apple devices.i started with iPhone 3gs, iPad Air, Late 201527′ 5k iMac and 4th gen Apple TV. The Apple TV still feels like a beta project and wish I waited till the 2nd generation tvOS and Siri remote Apple TV comes out.

        On the Apple watch I won’t be purchasing one until its a stand alone device and is not an iPhone accessory. I prefer it to be a health tracker, but that will probably be in a 3rd or 4th generation model or a separate device. Even then i would probably wait till refreshed version of the health tracking or stand alone model.

        I someof the bracelet,bands, bangles renders that have been made. I think bracelet with a a flexible low powered OLED and health sensors is a possibility of another form factor and actually probably a different name then Apple Watch.

    • Robert - 8 years ago

      Rumors with false information were presented in a way designed to make you think they came from a source in Apple. Of course Apple has people working on sensors but the expectation that the Watch would be loaded with them was a fabrication of people that spin rumors.

      • taoprophet420 - 8 years ago

        No it was not.Apple planned on releasing a health tracking device, but the sensors were unreliable, battery life was poor and other factors prevented them from releasing it and is why you seen the half assed presentation with doodles and sending heartbeats to friends. Apple clearly didn’t know how to market it with the health features removed.
        http://9to5mac.com/2015/02/16/apple-watch-health-features-cut/

      • applegetridofsimandjack - 8 years ago

        No it was clearly true. There were a couple of reports of those sensors being implemented in the Apple Watch long before its release. There were also job openings coming from Apple for people having worked with sensors that can detect diseases and stuff. And this was back in 2012 or early 2013.

        The sensors were unreliable so Apple gave up on them until they reach 95+% accuracy.

        And I think Apple released Apple Watch early because of media pressure to bring the next ‘big thing’ and/or Apple had already been working on the watch for so long that Tim wanted it to start paying back all the R&D they spent on it.

        One thing is certain, it was rushed. Just like Apple Maps and Siri were.

    • PMZanetti - 8 years ago

      Before you post tirades like this that have been pulled straight out of you know where…do you give even a moment’s thought to the accuracy or viability of any of it?

      What on EARTH makes you think that there are ANY Apple Watch buyers that are “holding out” due to “lack of features”. The Apple Watch has features coming out its ears. After almost a year with the device, I love it, and I love it for maybe 2-3 core features: Notifications, Siri and….being a Watch; a customizable one with a lot of useful info on the watch face. It can do SO much more, but I haven’t even gotten in to that yet. As a product it does’t really need to be more than that.

      If it was a truly comprehensive health and fitness device, it may open up some new interest…but what you don’t realize is…its still an Apple Watch. No matter what health and fitness features it has for health and fitness freaks…they still have to want to wear an Apple Watch. They are not going to buy and wear one in spite of it being an Apple Watch.

      • taoprophet420 - 8 years ago

        I guess you don’t think Apple should added stand alone apps to the Apple Watch or kept the iPhone using web apps and not making an App Store and stand alone apps.

        It’s easy to look at Apples debut of the Apple Watch and they had no clue how to market its features after they cut out the Health capabilities. You can look at the Heslth app, HealthKit, ResearchKit, and CareKit and see Apple wants to build a health tracking device. It will most likely be a separate device from Apple Watch.

        Right now the Apple Watch is a primarily iPhone fashion accessory that delivers notifications and makees it a tough sell to many people.

        It’s very naive to think people don’t want a stand alone device with its own network connection and not having to be tethered to an iPhone.

      • capdorf - 8 years ago

        Well, I for one, am waiting. A watch with less than one day to a charge, is not good enough, especially if used for health checking. My present watch doesn’t require charging ( new battery every 2 years) A good quality link metal band cost me about $60. If I have to carry the iPhone, then I’ve got all the other fancy apps on me. Don’t tell me I have to take it out of my pocket, I can’t just look at the phone either. Oh and yes I have all the other apple gadgets ( not up with the latest tv, don’t like the remote)
        So now tell me I’m not holding out from lack of features and then tell me what features make it essential to me?

      • PMZanetti - 8 years ago

        @capdorf

        You’re not even remotely close to being in the same ballpark as an Apple Watch customer. So, no, you are NOT a holdout. You are not even a customer. Comparing the battery life of an Apple Watch to a traditional watch is absurd and doesn’t even deserve commentary.

  2. pdixon1986 - 8 years ago

    i know theyve only just reduced the prices of the sport watch – but given that this is a first gen, with second gens coming out just around the corner, and that people tend to hold out unless the price is right — then i would have liked to have seen the starting price being at least $249 (basically a bigger reduction on the sport model…and a small reduction on the watch stainless version.

    • applegetridofsimandjack - 8 years ago

      Apple won’t drop the price to 249 I think because most smartwaches cost this much and Apple always adds a premium because they know people will pay more for their products. I always expected the price to drop to 299 for Apple Watch, the cheapest model. Still hoping it will happen.

      • applegetridofsimandjack - 8 years ago

        By 299 I mean also 299 In european countries… Already 299 in the us.

      • pdixon1986 - 8 years ago

        most other smart watches don’t work with iOS…those that do have limited functionality… but 299 i think is still too expensive for a smart watch.

        My friend tried to convince me to get a pebble time instead — that was about 199 when he bought it… i told him, for me, it’s only worth around 100.

        299 for apple watch is still tempting for me…but with the apple watch 2 possibly only 5-6 months away, the price is making me torn between waiting or buying now — a drop to 249 and i would buy now.

  3. taoprophet420 - 8 years ago

    The regular Apple Watch needs embed sim and ability to be a stand alone device and not an iPhone accessory. It still lacks a purpose or a killer feature. Apple spending 10 minutes talking about doodles and sending heartbeats shows it didn’t have a true purpose. Right now it’s still mostly used for notifications.

    I hope we see a preview of health tracking device. It’s almost a crime to have ReasesrchKit,HealthKit,CareKit and the Health app and no device to take advantage of them. Apple has the ability to make a truly life changing device that people and doctors can more actively improve health and monitor conditions. Instead you have a device that you can send silly doodles, get notifications and acts as an fashion accessory to the iPhone.

    • PMZanetti - 8 years ago

      Ugh here we go…right back where we were with the people clamoring for an iPhone-less Apple Watch. This ranks up there with probably the most clueless and downright ignorant demands.

      What part of, “The Apple Watch is what it is, and does what it can do, BECAUSE of the fact that it is fed so much data and info from iPhone, and takes advantage of all the battery and processing power and OS features that the iPhone has on tap”…..do you not understand?

      You want Apple to just MAKE IT HAPPEN. What a joke.

      • taoprophet420 - 8 years ago

        Again with your thinking the iPhone should kept web apps and not ever got support for first party apps and a robust App Store. Were you screaming when Apple added 1st party apps to watch alas 2 last summer?

        People do want it to be more then a fashion accessory that delivers notifications from their iPhone. With embedded sims ready to flood the market it will be easy to make stand alone smart watches.

        Many people can pull out their phones to get notifications or the quick glances you get with the Apple Watch.

        Notifications, Siri or Apple Pay are not killer features they make the Apple Watch a must have purchase for the masses.

      • PMZanetti - 8 years ago

        @taoprophet420

        No, that is NOT the same thing. The iPhone could have had an SDK and third party Apps the day it launched. It was a choice to keep that for later. Not a functional impossibility.

        Comparing the Apple Watch and its feature set/capability to one that doesn’t need an iPhone at all….basically claiming that its possible for an Apple Watch to be an iPhone if they wanted it to be…its fucking absurd on a level not even worth addressing.

    • JBDragon - 8 years ago

      You sound like you don’t own a Apple Watch! There is zero reason to have a SIM in the Apple watch. Let alone be a stand alone product! As they say, you spend hours on a PC, Minutes on a Smartphone and Seconds on a Smartwatch. That’s really how you have to look at it. It’s all been about big screen phones and now you want to go to a tiny screen watch to do everything? That’s beyond silly. You’re going to need a huge watch just to have enough battery to have cell service and do all the crap you want to do. Might as well strap a Smartphone on your wrist and call it a day.

      I have never sent a doodle or heart beat to someone on my Apple Watch. Notifications is great!!! I’ve limited it t just some really Important things that I want to see. Everything else is on the phone. This way I’m not always pulling out my phone, turning it on and seeing what the latest ding is. Same goes with Who’s voice calling me.

      I can leave my phone in my house someplace and still see Text messages and even answer the phone on my watch. Hell I can leave my phone in my Office at work, head across the factory to the restroom and still get my Notifications, phone calls, reply to text, and use my Apps that load up from the phone. Long as I’m on the same Wifi Network with both. As it uses Wifi and Bluetooth. I like all the little things that overall make it great. Just a quick glance, I can see the time, Date, Next calendar appointment and what the current temp is outside or if it’s going to rain soon. (Using Dark Sky).

      I’ve been using HeartWatch lately. Tracks your heart rate and Movement while you;re sleeping to see if you’re sleeping well or not. If you’re sleeping enough hours, etc. So I normally have over 50% when I take my watch off at night before bed and let it charge for a hour to top it off, throw it back on and run the app. In the morning when I wake up and tell it I’m awake, I throw it back on the charging stand while I go to the bathroom and do my thing which tops it back up to 100% and on my way out. So it’s on the charger for maybe 20 minutes.

      It’s a SmartWatch, you really should only be on it for seconds. It would be silly to read and type out your email on it. Or Watch a Video, or other things you would normally do on your SmartPhone. Battery size on a watch like this can only be so big. Some want it thinner. I don’t see how that’s possible and I think it’s fine, but thinner and more sensors? What fantasy land are people living in? What RUMORS or other sensors going around were just that, RUMORS. As in not a FACT. But say Apple was working on other sensors to track health. Now you’re getting into a area where the FDA, FCC and the OCR can get involved. when it comes to Medical Devices and App’s. Every tiny change Apple would do would have to get retested.

      Having used my Apple Watch since last Nov, Apple has done a really good job. Especially once WatchOS2 came out allowing 3rd party App’s installed on the watch. I wish more App’s would do it. This speeds thing up so you’re not having to send so much data to the watch form the phone. That’s really the only issue many have is slow loading of 3rd party app’s. i don’t think it’s as bad as some say, but it could be faster. I still don’t expect a new watch until this time next year. There’s no need to release a new Apple Watch every year. A 2 year cycle would be just fine.

  4. taoprophet420 - 8 years ago

    KGi is very reliable and what’s he says is limiting sales is true. It’s lacks a killer app or purpose and is an iPhone accessory.

  5. Anyone declaring that the Watch has limited battery life hasn’t used one.

    • Compared to a Pebble, the Apple Watch has a very limited battery life.

      • BeardMan - 8 years ago

        You can’t compare an Apple Watch with a Pepple reducing it to the battery life. Apple Watch has a lot of features the Pepple doesn’t have combined with a iPhone.
        I would complaining about the battery life if it wouldn’t last a whole day long, but my Apple Watch battery lasts nearly 2 days.
        It shouldn’t be a problem to charge your Apple Watch during night, when you also charge your iPhone.

    • capdorf - 8 years ago

      So it lasts a week then? My watch lasts 2 years, though I would pass a week. I don’t want to carry my charger with me when visiting. Sometimes I end up staying a couple of nights that weren’t originally intended. Or loading an extra charger in my luggage when travelling.

      • Complete strawman argument. You’re bringing a charger and providing for your Phone, why is it a problem to do the same for your Watch?
        Answer: It’s not.

        I wear my Watch 23+hrs a day, only charging it when I have a shower after going on the treadmill. No problems with battery life whatsoever.

    • taoprophet420 - 8 years ago

      If you are using the Apple Watch for notifications and other basic things the day of battery life is acceptable. If you want to monitor vital signs or other real health monitoring things charging the watch every night is not acceptable.

      Ideally it needs wireless charging and not inductive charging.

      • BeardMan - 8 years ago

        You can charge it in the morning when you’re get ready for work and in the evening while you’re watching TV, like I do, so my Apple Watch never runs out of battery. I wear my Apple Watch at night for sleep tracking and heart rate measurement reasons also.

    • paulthefencerfencer - 8 years ago

      I agree, John. It’s currently 12:24 PM as I type this and my watch has been on my wrist since 6:55 AM.My battery is at 95% The least battery strength I’ve ever had (and that’s from around 7AM till about 1AM) is around 45%. Sure you can’t wear it for days, but it surely lasts me for a very long day with about half battery life left at the end of it.

  6. Robert - 8 years ago

    There’s always a Hyde spoke with the launch of a new product or model. With no new launch this year sales will likely be less. With a new model launch anything can happen!

  7. taoprophet420 - 8 years ago

    With the new bands released it was pretty clear the next model would be a s model equivalent upgrade. You can’t shrink the thickness much and still have the previous generation watch bands fit.I would not be surprised to see a totally new device demoed this year that has health tracking and new form factor.

    Apple needs to hurry and release a health device. HealtKit, ResearchKit and CareKit are limited without a device made to take full advantage of them.

  8. standardpull - 8 years ago

    GREAT news: KGI’s findings are in line with my study and analysis of the Smartwatch market.

    Here are my conclusions, given my deep study of the market. Note that the KGI study seems to implicitly validate my conclusions, which is not surprising given our similarly expert research:

    (1) I expect older versions of the watch to not sell as quickly as when they were first released.

    (2) I expect that Apple, over time, will release new versions of the watch.

    (3) I expect future Apple watch models to be like the current model, but thinner, lighter, have a longer battery life, and have more features.

    (4) I expect Apple to release a new model within 12 months.

    (5) I expect watch sales to increase significantly when Apple releases a new model.

    I hope that is helpful to buyers and investors.

    Thank you.

  9. taoprophet420 - 8 years ago

    Ben I would like to see Mark write or comment on how the Apple Watch lost it health a king capabilities and sensors. He wrote many articles during the Watch and Health app development. Maybe he cantt say much, because it would reveal who his source was. Besides tidbits in the WSJ there hasn’t been many details on what happened in its development

    Curious What Tim has planned when he recently say he is ok taking an app or other device through the FDA to get it released.

    • Ben Lovejoy - 8 years ago

      Tim Cook addressed this issue. The tl;dr is they do plan separate sensors, but not in the Watch itself as FDA approvals would slow down development. http://9to5mac.com/2015/11/10/apple-health-products-tim-cook/

      • taoprophet420 - 8 years ago

        That’s the statements I was referring to. I don’t see white all what is included in the Health app what would be in an FDA approved app.

        I hope they make a health tracking braclet/ bangle that’s a separate device instead of bands that connect to the Apple Watch. I think true wireless charging is a key to true health tracking device.

  10. gshenaut - 8 years ago

    I think the main problem of the Apple Watch is the battery life limitations. This is the main reason I don’t have one. It would be interesting, for example, if there were something fairly comfortable that could be worn at night on the same arm as the Watch, that could charge it up, allowing the Watch to continue to operate.

  11. yojimbo007 - 8 years ago

    Kuo.. Has zero credibility in market analysis and forcasts.
    He reputation is having so e limited insider info about future products… Thats it.

  12. Doug Aalseth - 8 years ago

    When the AW was released I said that the only way to find out if it was a success was when we started seeing Year over Year figures. To assume that these figures are true, would be a big assumption. But if true, I’d be willing to say that my skepticism was correct. The AW is not the breakthrough, game changing product the iMac, iPod, iPhone, iPad were. It’s a cute little wrist trinket, limited in function, battery life, and most importantly market. Yes, Apple has revolutionized the Smart Watch category. The trouble is that only a small percentage of people WANT a smart watch. The AW will always be a big fish in a very small pond. Wearables are just not ready for prime time.
    DISCLAIMER: I didn’t want one then and I’ve seen nothing in the last year to make me want one now.

    • iSRS - 8 years ago

      Fair assessment. My personal reason for not getting one yet is that this will be a device I replace maybe every 3-4 years. So waiting for the 3rd gen is what will work for me.

      Also, there is a lot of talk about the “iPad line is getting confusing” – well, the  WATCH line can be a bit cumbersome. And you really HAVE to go to a store and try them on, versus the iPad or iPhone – where you can have a good idea of what you are getting with those, the same can’t be said for the  WATCH

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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