If the iPod was a cultural phenomenon and the iPhone changed the smartphone industry, the Apple Watch has proven that when it comes to competing with Apple in wearables, it’s an arduous task.
On Tuesday, market researcher Counterpoint Research said that Apple Watch shipments rose by 22% year-over-year in 2018, earning the company 37% market share. Chinese company iMoo landed far behind in second place with 10% market share. Samsung was able to nab 9% of the market and Fitbit, which sells several popular fitness bands and smartwatches, was in fourth place with 8% market share.
Counterpoint then evaluated the market’s five top-selling smartwatches in 2018. Apple Watch Series 4 took the top spot, selling 11.5 million units despite only hitting store shelves in the fourth quarter of the year. Apple Watch Series 3 was next, followed by the Fitbit Versa. The iMoo Z3 was the fourth-most-popular smartwatch, followed by the Apple Watch Series 2 Apple released in 2016.
In their analysis of the data, Counterpoint analysts spent extra time on the Apple Watch Series 4 and said that its success was due in large part to its health-focused features, like electrocardiogram, which lets wearers evaluate their heart health while wearing the device.
“It speaks volumes of how far Apple has come with Apple Watch as a meaningful health device,” Counterpoint’s Satyajit Sinha said in a statement.
It’s all about the ecosystem
The story of Apple’s smartwatch dominance stretches beyond the Series 4’s success. Since its initial release in 2015, Apple Watch has been the industry’s leading smartwatch, and most industry watchers believe its dominance will continue.
“Apple Watch accounted for 54% of all smartwatches sold worldwide in Q1 2019,” Strategy Analytics executive director Neil Mawston tells Fortune, adding that his firm forecasts Apple will nab 48% of the global smartwatch market in the first quarter of 2020.
Both Mawston and Wedbush analyst Dan Ives credits Apple’s unique “ecosystem” for the wearable’s success.
“[Apple] offers a famous brand, user-friendly wristwear with plenty of apps, and an extensive retail presence worldwide,” Mawston says. “Apple Watch remains one step ahead of almost all rivals in hardware, software and services.”
“The colors, interface, and application ecosystem has taken Apple Watch from a concept into a successful product launch,” Ives adds.
It’s a refrain we’ve heard before in Apple’s universe. Unlike other companies, including Apple’s arch-rival Samsung and LG which rely on third-party providers for their software and many services, Apple is largely self-reliant. The company builds the hardware, bundles the software, and promotes its own services. So, if you own an iPhone, it’s far easier to get up and running on an Apple Watch that connects to your Apple account than it would be to go with an Android-based alternative.
Apple has also benefited from the 1.4 billion iOS devices in use around the world. Developers hoping to make a buck on a new app are attracted to that massive user base. And they regularly build apps for Apple’s operating systems. Apple also makes it easy for developers to create Apple Watch versions of their iPhone apps that are automatically added to a user’s Apple Watch.
“Competing with Cupertino and a cult-like consumer following is a difficult task for any competitor,” Ives says.
While Apple’s market share remained strong at 37% in 2018, it was down slightly from the 43% share it had in 2017. Meanwhile, Fitbit, which has developed its own loyal following, saw its share grow from 1% to 8% over the same period. Mawston said that as time goes on, it could be nearly impossible for Apple to maintain its current pace and could soon be challenged by fellow tech heavyweights.
“Rivalry from new entrants, like Google or Amazon Alexa, is emerging on the horizon,” Mawston says.
Ives similarly questioned what the future might hold for Apple Watch. He said that Apple has “changed” the wearables market, but wondered “what is next for Apple on this front.”
The notoriously secretive Apple isn’t saying. But Apple CEO Tim Cook has, for the past year, continued to pound the drum on establishing Apple Watch as a device that can save lives and help people improve their health. In an interview earlier this year at the TIME 100 Summit, Cook touched on Apple Watch and its importance in improving health, and suggested that Apple might ultimately be remembered as a healthcare company.
“I do think there will be the day that we will look back and say that Apple’s greatest contribution to mankind was in health care,” he said.
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