• Apple Watch shipments declined by 19% in 2024, primarily due to a lack of new models and significant upgrades.
• The North American market, a key region for Apple, experienced a significant decline in Apple Watch shipments.
• Counterpoint Research suggests Apple needs to release new Watch SE and Ultra models and focus on substantial design upgrades to regain market share.

Apple Watch shipments experienced a sharp decline of 19% in 2024, according to Counterpoint Research's Global Smartwatch Shipment Tracker. This marks the second consecutive year of declining shipments for Apple. The decline is attributed to a combination of factors, including a lack of significant upgrades in the latest Watch Series 10, the absence of new Watch SE and Ultra models, and increased price sensitivity among consumers, particularly in the crucial North American market.

• What: Apple Watch shipments experienced a significant decline of 19% in 2024, attributed to a lack of new models, minimal upgrades, and price sensitivity.
• Who: Apple, Counterpoint Research, Huawei, Xiaomi, potential impact on US consumers.
• When: The decline occurred throughout 2024, with Q4 2024 marking the fifth consecutive quarter of declining shipments.
• Where: Globally, with significant declines in North America. India was an exception with shipment growth.

The decline in Apple Watch shipments underscores the increasing competitiveness of the smartwatch market. Apple's strategy of incremental updates may not be sufficient to retain customers or attract new ones, especially with the availability of more affordable options from competitors. The lack of a new Apple Watch SE, a popular budget option, seems to have significantly impacted sales. The potential impact of tariffs on Apple Watch prices could further exacerbate the situation, making it crucial for Apple to innovate and offer compelling upgrades to justify its premium pricing.

"Most Apple watches entering the US come from Vietnam -- so we are watching the Vietnam tariff situation," he said. "If there are no exemptions or trade deals, we expect US consumers to pay for the increased costs of tariffs. We do not believe Apple or any other companies in the value chain to end consumers will absorb the cost of tariffs."

To rebound from a 19% shipment decrease in 2024, primarily driven by a North American downturn and an 8% market share reduction in the advanced smartwatch segment, Apple's strategy must extend beyond mere product refreshes. Counterpoint Research suggests that positive shipment volumes may return in 2025 if redesigned Watch SE and upgraded Watch Ultra 3 models are successful. Key to this recovery is the introduction of compelling new features, as the absence of a new Watch SE and only incremental upgrades to the Series 10 contributed to the decline. The Watch SE, which hadn't been updated since Q3 2022, is expected to feature 1.6 and 1.8 inch display options and may see a redesign involving a shift from aluminum to a plastic base. For the Apple Watch Ultra 3, rumored upgrades include 5G connectivity, satellite communication, and a blood pressure monitoring system. The integration of 5G and satellite messaging aims to offer a more independent user experience, potentially reducing reliance on the iPhone. A transition to MediaTek modems is expected to enhance cellular connectivity, while satellite connectivity could mirror the iPhone's Emergency SOS feature. While the Ultra 3 might not see radical visual changes, a focus on refining core strengths like performance, connectivity, and wellness tracking is anticipated. Moreover, inclusion of the LTPO3 OLED display from the Series 10 to the Ultra 3 could lead to a display that is up to 40% brighter when viewed from an angle. Addressing consumer price sensitivity and navigating potential tariff implications will also be crucial. With increased competition from rival brands and ongoing legal issues, Apple needs to deliver meaningful innovation and value to regain market share and ensure future growth in the smartwatch market. Analysts also suggest that a redesigned metal back casing could improve wireless charging and cellular signal strength of the new Apple Watch models.