The global smartwatch market witnessed a downturn for the first time, marking a 7% decline in 2024 compared to the previous year. The downturn is attributed to multiple factors, including a significant decrease in Apple's market share and a shift in consumer preferences. Apple's market share dwindled from 25% to 22% in the final quarter of 2024, with shipments of Apple Watches falling by 19% during the same period. Meanwhile, Chinese manufacturers such as Imoo and Xiaomi capitalized on the growing demand for smartwatches tailored for children, resulting in substantial shipment increases.
Apple faced a challenging year as it grappled with sales and import bans in the United States over a disputed patent concerning blood oxygen level monitoring. This, coupled with the absence of new features in their latest devices, contributed to the slump in sales. Anshika Jain noted,
"The biggest driver of the decline was North America, where the absence of the Ultra 3 and minimal feature upgrades in the S10 lineup led consumers to hold back purchases."
Consumers expressed dissatisfaction with the lack of innovation, which may have impacted purchase decisions. The high-end Ultra 3 model, rumored to be a game-changer for Apple, never materialized, leaving a gap in the market.
In contrast, Chinese companies Imoo and Xiaomi thrived by tapping into the smartwatch market for children, the only segment to grow in 2024. Imoo saw a 22% rise in shipments, while Xiaomi experienced an impressive 135% increase. Balbir Singh highlighted the appeal of children's smartwatches:
"The kids' smart watch segment is gaining traction as parents are concerned for their children's safety, and they desire to track and stay constantly connected with their children."
China's market share expanded from 19% to 25% by the end of 2024, benefiting from this trend. In India, however, the smartwatch market share decreased from 30% to 23%, indicating a regional shift towards Chinese manufacturers.
Leo Gebbie commented on Xiaomi's success:
"Xiaomi has done a really good job of selling devices, particularly in regions like southern and eastern Europe where that greater affordability tends to resonate a lot more strongly with customers."
With fewer dramatic changes in features year-over-year, the smartwatch market is stabilizing. Gebbie further explained,
"We've been through a period where the smartwatch has gone from being a new and exciting gadget, to something now that's stabilising – the feature set isn't changing very dramatically year over year."
Counterpoint Research anticipates a slight recovery in the global market, predicting "single-digit percentage growth in 2025." The market's evolution and increased competition among Chinese manufacturers could drive further shifts in consumer preferences.