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Apple Watch 2 May Not Be A Hot Product – JPMorgan

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Apple Watch 2 with its new WatchOS 3 may be a great upgrade to the original Apple Watch. The first iteration was quite a sales success, according to a report by Wareable. But I would say ?sales? rather than ?market? because Apple Watch sales hit 12 million in 2015, thus dominating the wearable smart devices niche. But the market, including the customers and potential customers, have a mixed review of the device.

As pointed out by David Jones of E-Commerce Times, Apple wanted to create a Dick Tracy-like gadget with the capabilities of the iPhone, but instead it created an extra iPhone appendage. He added that this was a little slow and complicated for many customers to navigate and use. Would WatchOS 3 help it? There?s a chance it could but JPMorgan is not so excited about it and how the Apple Watch 2 will fare.

JPMorgan analysts cut down the Apple Watch estimates for 2016 from 23.5 million unit shipments to 11.9 million–that?s close to 50 percent. This is not the end of it. JPMorgan also sees the wearable to penetrate 7 percent of ?its addressable base? by the end of 2017. The previous assumption was pegged at 15 percent.

In a CNBC interview, Rod Hall, one of the JPMorgan analysts, stated that people still have not figured out the use for such a wonderful yet underdeveloped product. JPMorgan also contacted their clients of these figures plus its price target for Apple shares–from $125 to $105. This previous Thursday, Apple shares were already traded slightly higher, more than $97 per share. It is also 8 percent lower for 2016.

But it looks like the Cupertino giant is not backing down from its aggressive strategy. According to Digitimes, rumors abound that Apple stepped up its procurement of chips and components for the said watch. They are quite higher-than-expected.

Apple Watch finished 2015 with a 52 percent share of the market. But other competitions in the wearables market like Microsoft Band 2 might challenge them for their top spot and eat away significant shares.

Overall, according to an IDC report, smartwatch shipments and shares will increase the most among wearable products. It is estimated that by 2020, smartwatches will enjoy 52.1 percent of the market share. But we don?t know yet what exact product will come out on top. Will it be Apple still or would there be any takers? I guess we’ll find out when it is out.

Do you think the new WatchOS changes are significant to make the Apple Watch 2 hot? Leave your comments below.

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