KGI Securities analyst Ming-Chi Kuo, who is one of the most reliable Apple analyst out there, estimated in a note sent to clients Monday that shipments of the Apple Watch will decline 25 percent in the calendar 2016, despite the expected introduction of a second-generation model some time later this year.
According to the note, a copy of which was obtained by MacRumors, Apple will sell a total of 7.5 million Apple Watch units this year versus an estimated 10.6 million Apple Watch sales in 2015.
It’s important to keep in mind that the Apple Watch effectively enjoyed eight months of sales last year (the device debuted in April 2015), making the projected 25 percent sales decline even more precipitous.
The note cites two reasons for the estimated drop: an “immature wearable device market” and the fact that the Apple Watch is basically a 1.0 product that lacks some important mainstream features.
Specifically, Kuo singled out the Apple Watch’s dependency on the iPhone along with limited battery life and apps that leave a lot to be desired as the reasons translating into weaker than expected sales.
The analyst is adamant that the second-generation Apple Watch will enter mass production in the third quarter of 2016 ahead of its fall launch alongside the iPhone 7.
The Apple Watch 2, according to Kuo’s note, will be an S-upgrade so it should keep the current design and focus on internal changes such as a faster processor, more sensors, a stronger battery and so forth.
Another analyst, Brian White, recently predicted that the Apple Watch 2 will launch in time for Apple’s worldwide developers conference this summer. White, who has a terrible track record predicting Apple’s moves, thinks the device will be 40 percent slimmer than the current model.
Apple does not report Apple Watch unit sales for competitive reasons.