Apple Watch sales slump sets off growth alarm

Sales of the Apple Watch more than halved in the second quarter, with new figures from researcher IDC suggesting chief executive Tim Cook's first significant product is failing to live up to expectations.

The sharp decline is highly unusual for a new Apple product so early in its life and will compound Wall Street concerns about the company’s overall growth prospects this year.

The iPhone posted nine years of uninterrupted growth from its launch in 2007 until the first quarter of this year, when unit sales fell 16 per cent to 51 million.

IDC said yesterday that Apple sold 1.6 million of its watches in the second quarter of 2016, down 55 per cent compared with 3,600,000 in the same period last year. The drop dragged down the entire smartwatch market despite rapid growth from Samsung, up 51 per cent to 600,000 watches, and Lenovo's Motorola brand, up 75 per cent to 300,000.

"Despite a down quarter, Apple remains far and away the market leader in smartwatches," said IDC analyst Ramon Llamas, with traditional watchmakers such as Casio, Fossil and Tag Heuer's recent attempts to break into the wearable-tech market making only a limited impact.

“Every vendor faces similar challenges related to fashion and functionality, and though we expect improvements next year, growth in the remainder of 2016 will probably be muted,” Mr Llamas added.

Apple has not released any sales figures for the Apple Watch since it first went on sale in April 2015.

Analysts have estimated that it sold 12m units in its first year, more than the iPhone during its initial 12 months on sale, but below many observers’ initial expectations for the first launch into a new hardware category since Mr Cook took over as Apple’s chief executive.

Apple declined to comment on IDC’s figures, ahead of its earnings report next week.

The Apple Watch, a revamped Apple TV and new Apple Music service have so far failed to offset the declines in iPhone and iPad sales, which Tuesday’s figures are expected to show have continued in recent months.

- (Copyright The Financial Times Limited 2016)