Samsung | Bleak | Fitbit | Bleak

Latest data for ex-factory shipments in North America by Canalysys show a bleak picture for Samsung & Fitbit.

Source: Canalysys

What Canalsys data shows

Canalysys state that North America is only one of two growing regional markets in this quarter and further suggest that growth is now coming from the low-cost end of that market evidenced, they say, by

• Overall market value flat at $2bn
• Units shipped up 10%
• Average selling price declined by 11%
• ** Average selling price at US$235 (NOTE WELL) **
• AW3 had 30% y.o.y. growth
• AW5 is the best-selling smartwatch.

Further to that commentary, you can see from the table above that Samsung haemorrhaged shipments/trade sales (-48%) and Fitbit fell heavily too (-12%), technical reasons could explain these drops as each supplier clears out inventory for the arrival of the new products we already know about. Along with Apple, Garmin is a clear winner perhaps because they are uniquely placed, with a wide portfolio, to enable them to meet unexpected changes in the market at all price points.

Some Commentary

This data reinforces what this blog, and others, have been saying for several years.

• The volume, low-end of the market is being swamped by producers with significant cost advantages (Asia: cheap labour, cheap setups, ‘easy’ funding)
• Traditional companies trying to compete at the low-end of the market are going to find it difficult and risky.
• Market share is king. It always is in the longer term.
• High volume, low value and/or low volume, high value are usually the 2 winning strategies. You can only compete in the middle if you have a decent mid-market share as margins are tighter there (Apple).
• Garmin is well placed. For now. Once tech peaks, once the sports/activity/health watch markets peak, once the cheaper tech is more capable then Garmin may well struggle and probably eventually lose out.
• Apple is the long term threat to the top 2/3rds or top half of the price points. We WILL see a new Apple Watch 6 and 6SE (next week) which will re-iterate this fact.

Anecdotally: My regular readers here are athletes, just think about your fellow runners and swimmers…how many more Apple Watches have you seen them wearing over the last 2 years? Sure an Apple Watch is not a sports watch but, hey, the evidence is there before your eyes to explain what is happening.

Anecdotally: FORM Goggles bring out a new product that connects to two ecosystems…one Garmin CIQ…the other Apple WatchOS. Go figure.

Now perhaps the more interesting stuff.

I don’t think what Apple will come out with next week is going to be the market-killer it perhaps could have been. It’s still going to be the same-old, divisive rectangular ‘thing’ with a crown and it’s still going to have a battery problem, albeit reduced from the current models. It’s still going to be more interested in health, wellness and activity rather than outright sports. Furthermore, Apple broadly iterates significant AW product changes every TWO years meaning the AW7 in 2021 will basically be the same as next week’s AW6 release. I have a strong suspicion that by AW8 in September 2022, Apple will be offering an even wider, more capable and more devastating series of AW offerings..slowly…slowly.

Consequently, the other companies have got two years to sort themselves out. Two years to fend off wave after wave of low-price attacks that could kill significant volumes of sales and then impact on the ability of the remaining sales to absorb the significant fixed cost overheads that they all probably have. Two years to cement your position at the top-end – if that’s where you want to be.

Good luck folks.