Faith in fake Apple Watch news industry falls 71%

On estimates, context, and reality distortion

“Apple Watch sales fall by 71 percent”, the headlines claim, but these reports perfectly illustrate a preference for clickbait over substance as the narrative grabs yet another chance to transgress journalistic probity in the service of anti-Apple snark.

“Off the charts”

IDC has published new data on what it calls the “wearables” market. This claims Apple Watch sales fell around 71 percent in the third 2016 quarter.

“The primary reasons for the downturn were an aging lineup and an unintuitive user interface,” said an analyst, before stating, “Though both issues have been addressed with the latest generation watches, Apple's success will likely be muted as the smartwatch category continues to be challenged,” IDC said.

These estimated figures are based on the analyst’s own research, but I don’t think they include any definitive Apple Store retail or online sales data, nor do I think they include sales through those non-tech department stores in which Apple Watch is often sold

This means IDC’s data is quite speculative, particularly as Apple doesn’t share its own sales data.

IDC does not count iPads as computers in its PC market share figures because it doesn’t think they can be compared, but it is interesting that it does see low-end fitness trackers as devices that can be compared to smart wearables.

Reality distortion

What really matters when you sift through the headlines reporting IDC’s estimates is the way the information is presented as relating to the here and now, with the actual context relegated to an aside.

The quarter in question was a bridging period between Apple’s WWDC announcement of the Apple Watch Series 2 and the device shipping in September.

Sales declines at that time were a lull before the storm.

People stopped buying Apple Watch because they wanted to buy the new version and had to wait to do so.

The headline should be “Apple Watch sales slow while customers wait for a new version,” not “Apple Watch sales fall 71 percent”.

The first is what happened, the second is also what happened but divorces the events from the time in which they took place, and what they represent.

Unfortunately, this kind of credible reporting doesn’t fit the narrative of our current patch of anti-Apple reality distortion. This could even be why a much more positive recent wearable industry analysis from Canalys has not been more widely reported.

“Canalys research shows that shipments compared favorably to those in Q3 2015, the first full quarter after the original Apple Watch’s launch in April 2015,” the analysts said in November.

What really happened?

In a rare response to IDC’s “expert” analysis, Apple CEO, Tim Cook, spoke to Reuters.

Apple probably felt the need to respond because the manner in which IDC’s data is being presented reflects badly on Apple Watch 2 – readers see the headline, but miss the context.

Tim Cook: "Our data shows that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year," he said.

"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,” he explained.

Cook declined to share any fresh sales data.

Failure everywhere

The big picture is very different from the sketch we see from IDC. At the high end of the smart wearable market, Apple now reigns supreme. Lenovo-owned Moto, Huawei, LG and (possibly) even Samsung are abandoning (or at the least, slow to develop their presence in) Android Wear.

It is true that some leading conventional watchmakers are fighting for survival by putting Android inside their devices, but the truth is that Apple now dominates the high end of this industry in a similar way in which its iPod once dominated the MP3 player market.

This is even before launch of a Series 3 model next year, a model that in conjunction with AirPods and (potentially) glasses will replace most of what you use your smartphone for.

While there are many who say Apple remains overly exposed to iPhone income, it is worth thinking about this recent note from Neil Cybart at Above Avalon, which may help illustrate the growing importance of Apple Watch.

 In a separate note, Cybart adds, “Cook's comment implies Apple Watch sales will be close to 5M units this quarter. It's time for the doubters to admit Apple Watch is a thing.”


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Copyright © 2016 IDG Communications, Inc.

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