Apple saw strong interest in its updated Apple Watch Series 3 smartwatch in the third quarter, but most buyers opted for models without the most-touted new feature: cellular connectivity.
According to market tracker Canalys, Apple shipped 3.9 million watches in the third quarter, but only 800,000 with an LTE wireless modem included. Some early reviewers reported problems getting the watch to connect reliably using the LTE feature. And Apple charges $399 for the entry-level connected model, versus only $329 for the cheapest watch without LTE, with wireless carriers tacking on another $10 per month for connectivity.
But wireless carriers may have underestimated demand and the LTE-capable model could prove more popular in coming quarters, Canalys analyst Jason Low said. “Strong demand for the LTE-enabled Apple Watch Series 3 has dispelled service providers’ doubts about the cellular smartwatch not appealing to customers,” Low noted in a report on third quarter shipments. “Besides bringing in more stock, operators should work on improving their remote service provisioning systems to cater for the expected higher demand in Q4.”
The refreshed Apple Watch also helped Apple (AAPL) grab the top spot in the quarter’s market rankings. Apple shipped 23% of all smartwatches, fitness bands, and other wearables, Canalys said, just ahead of Chinese low-cost seller Xiaomi, at 21%, and Fitbit (FIT), which captured a 20% market share.
Overall, the number of smartwatches shipped rose 11% to 6.8 million in the third quarter, but the number of simpler fitness bands fell 9% to 10.5 million.
With Apple, Fitbit, and even Samsung making smartwatches running proprietary operating system software, Google’s (GOOGL) Android Wear effort is in danger of becoming irrelevant. Some tech gadget makers have eased away from the Android Wear market, leaving mostly a few big name fashion brands like Fossil (FOSL) and TAG Heuer.
“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,” Low said in the report. “Otherwise, the market will see further consolidation, as vendors such as Apple, Samsung, and Fitbit dominate with their watch software platforms.”