Counterpoint Research for smartwatch sales in 2021

Last year we saw fantastic growth of smartwatch unit sales of almost 25% with one of the most telling themes being the growth of sub-$100 watches. Apple remains steady with a third of the overall market.

A new report today says that much of the 24% growth in the market during 2021 was driven by demand for sub-$100 models, but that Apple continued to outsell its nearest competitor by a factor of three to one.

ie

• Despite the fall in Apple’s market share, the overall growth in the market means Apple still increased the absolute number of units sold despite the delayed shipping of the Apple Watch 7.
• Apple’s market share is >30%, second-placed Samsung is 10%.
• Apple doesn’t sell sub-$100 smartwatches and they are, in fact, quite expensive watches. If the market share figures were re-based to the $-revenue values then the dominance of Apple at depleting consumers’ wallets would be even more starkly clear and the share would instead be over 50%

Source: Counterpoint

Here is Counterpoint’s low-down on each manufacturer

• Samsung was one of the most successful smartwatch OEMs in 2021. Its QoQ growth was more than 200% in the third quarter to record the brand’s best shipments ever. This growth retained strength until the last quarter. Moving to Wear OS through a partnership with Google has worked well for the brand in many ways.

• Huawei launched high-end new models and kids’ smartwatches despite continued US sanctions, but inevitably its shipments would decline YoY. Due to the Watch GT 3 and Watch Fit Mini, which were released in the fourth quarter, Huawei’s shipments more than doubled QoQ in the quarter.

• imoo did not release a new model in 2021, resulting in a slight YoY decline. However, as it entered markets outside China, such as Europe, it remained the undisputed No. 1 in the kids’ smartwatch segment.

• Amazfit succeeded in expanding its position in the market in 2021, recording more than 20% YoY growth over the past two years. Its ASP also rose 11% as the proportion of the GTR and GTS, the high-end models of the brand, gradually increased.

• Garmin performed better than expected in 2021. Garmin had initially focused on introducing high-priced smartwatches for special categories like aviation and divers. But it is gradually shifting focus to bringing attractive consumer products from price and design perspective. As a result, it showed 35% YoY growth and took sixth place by raising its global ranking by one place.

• Fitbit showed weak performance in 2021. Since the launch of the Sense and Versa 3 models in the third quarter of 2020, there has been no launch of new models, which seems to be due to strategy changes and reorganization due to the merger with Google. Therefore, it showed a YoY decrease of more than 15% in 2021. But it is expected to rebound with the release of the Versa 4 in the second half of 2022.

• Xiaomi showed strong performance with its Mi Watch Lite in the first half of 2021 and released the Redmi Watch 2 series in Q4 2021. In this series, it launched the ‘Lite’ variant to broaden users’ choices and we expect it to contribute to Xiaomi’s market share gain.

• Noise, the one local king in India’s smartwatch market, was the fastest-growing brand among the global top nine brands. Leading the growth of the Indian smartwatch market, Noise was India’s No. 1 brand in 2021 and 2020.

   

Thoughts – What to watch out for

It will be interesting to see which players can dominate the sub-$100 sector of the market and the favourites have to be either Chinese or Indian companies. Indeed we already see some new smart watches only being released in those countries, perhaps with sales in the West starting MANY months later (or never)

As Counterpoint mentioned, Fitbit/Google will be interesting to watch this year with several models suspected to be in the pipeline.

Also interesting will be Garmin who performed very well in 2021 despite a relative lack of new products, yet they probably still have quite a few more products to show us this year.

Market share and margin are key to companies’ futures. The companies well-set for the future will morph to be either high volume+low margin players like Xiaomi or (relatively) low volume+high margin players like Garmin and Apple. Companies in the middle are always going to be faced with stiff competition and some of that competition is always going to be competing on price for many consumers who are also price-sensitive. It’s no fun to play in the middle.

It’s difficult to see how Apple’s monopoly will be broken up. Apple has so much margin and shares to play with its ridiculous.

Garmin is doing well at inching its prices higher every year, they need to do this. The higher the prices get, ultimately the smaller the market must be. Yet we are also seeing Coros making inroads into some of their sub-luxury-priced markets and, of course, Apple isn’t really yet trying to compete head-to-head with Garmin for athletic uses. That pesky battery life & pretty screen conundrum seems mostly solved by Garmin with the AMOLED Epix 2, if Garmin can do it then you have to think that Apple has the resources to match or beat them and if, as rumoured, Apple is aiming for the low-end of the Fenix market (yes, really) then fireworks might start to fly.