Apple Watch Sales Decline for the second consecutive year, say Counterpoint

According to Counterpoint’s Global Smartwatch Shipment Tracker, Apple’s smartwatch shipments experienced a 19% year-over-year decline in 2024, marking the second consecutive year of falling shipments. The decline was observed across all regions except India. However, the significant downturn in the North American market, which accounts for over half of Apple’s smartwatch shipments, was the primary driver of the global decline. The trend reported by Counterpoint supports the analysis of Apple’s financial statements on this site and elsewhere.

In the advanced smartwatch segment, Apple’s market share decreased by eight percentage points year-over-year in 2024. The fourth quarter of 2024 was the fifth consecutive quarter to see a decline in Apple’s smartwatch shipments. This stands in contrast to major competitors offering advanced smartwatches, all of whom witnessed growth during the same period, most notably Garmin.

The Counterpoint analysis attributes the overall decline in 2024 to several factors. A key reason was the absence of a new Watch SE model in the latest releases. The Watch SE serves as a more affordable option within Apple’s smartwatch lineup and typically constitutes a large portion of shipments in the period following its launch. The last iteration of the Watch SE was released in Q3 2022. Apple is reportedly experimenting with the Watch SE design, moving from an aluminium base to plastic, which has delayed the release of a new model.

Furthermore, fewer substantial upgrades were incorporated into Apple’s latest Watch Series 10. The lack of a new Watch Ultra model also impacted shipment growth. The Watch Ultra is Apple’s most premium model and usually accounts for over 10% of shipments. However, its share dipped to under 8% in Q4 2024. Other contributing factors include increased competition from rival brands and legal issues. The third quarter of 2024 was notable as it was the first time Apple witnessed a year-over-year shipment decline in a quarter where a new smartwatch series was launched.

To stage a recovery in 2025 and maintain its market position, Counterpoint suggests Apple needs to introduce new features, launch updated Watch SE and Watch Ultra models, and potentially implement design upgrades. Analysts believe shipment volumes could potentially turn positive this year, provided a successful release of a redesigned Watch SE and an upgraded Watch Ultra 3.

Take Out

Counterpoint’s summary is somewhat bland and a re-statement of widely held views by industry commentators, including this site.

Specifically, Apple has to kickstart upgrade cycles. 2025 is a perfect time to release a next-gen SE – three years since the last one is the sweetspot for SE and Ultra 3 upgrades.

While most watch owners know that there is a new model each year, they also know that it’s never worth upgrading annually. This creates an unusual situation where many watch owners will be blissfully unaware of the need to upgrade to the new features, a situation compounded by the fact that their old watch likely supports the latest software. But Apple has an ace up its sleeve. The battery will become notably degraded between three and five years after purchase, forcing the owner into action. Voila, Apple creates an upgrade cycle there by natural redundancy in the hardware – do you pay for an expensive battery upgrade or buy a new Watch? I’d do the latter.

source: Counterpoint Research