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Apple retakes the lead in the smart watch race

Apple retook the lead in the wearable band market in Q3 2017, with shipments of 3.9 million. 

It posted its strongest quarter so far in 2017, thanks to the release of the Apple Watch Series 3. 

Xiaomi and Fitbit, which shipped 3.6 million and 3.5 million wearable bands respectively, have also bucked the trend of the traditionally weaker Q3 by posting quarter-on-quarter growth. 

But despite the increase in smartwatch shipments, waning demand for basic bands meant the overall wearable band market fell 2% to reach 17.3 million units.

Jason Low, Canalys analyst says, “Strong demand for the LTE-enabled Apple Watch Series 3 has dispelled service providers’ doubts about the cellular smartwatch not appealing to customers.”

Despite strong shipments, the Apple Watch Series 3 did not reach its full potential in Q3. 

It suffered limited availability as demand outstripped supply in major markets. Service providers had underestimated demand for the new Apple Watch.

Low continues, “In China, customers with high expectations are being driven away by the service disruption fiasco in the country.”

“Besides bringing in more stock, operators should work on improving their remote service provisioning systems to cater for the expected higher demand in Q4.” 

According to Canalys estimates, 800,000 Apple Watch units that shipped in Q3 were cellular-enabled.

Samsung, Apple and Huawei, the top three smartphone vendors by volume in Q3 2017, have positioned smartwatches to complement their premium smartphones.

Mo Jia, another Canalys analyst states, “While health features continue to be the core focus, vendors are striving to increase the value of smartwatches by prioritising design and highlighting key features.” 

Smartwatches are vital for improving the overall brand image for smartphone vendors looking to enter the premium segment.

Jia continues, “Apple and Samsung are increasing user stickiness and brand loyalty by adopting an ecosystem strategy, which includes wearables and audio accessories. 
“Smartphone vendors must reevaluate their respective smartwatch strategies to derive more value beyond smartphone growth.”

Vendors are expecting a stronger Q4 this year, with new smartwatches highlighting improved health-tracking features and longer battery life, on top of better and slimmer designs. 

Q4 performance will be crucial to assess consumers’ reaction toward the emerging trend of fashionable smartwatches that prioritize form rather than function.

Low concludes, “Google must show stronger commitment to help Android Wear vendors, which are now mostly watchmakers and fashion brands, to further improve the user experience and app ecosystem. 

“Otherwise, the market will see further consolidation, as vendors such as Apple, Samsung and Fitbit dominate with their watch software platforms."

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