A new market intelligence report has an interesting mix of news for Apple today. On the plus side, the Apple Watch continues to dominate the market, with a 41% market share – almost twice the share of second-placed Fitbit, at 21%. And the smartwatch market as a whole grew 37% year-on-year last quarter.

But there were two pieces of bad news also …

First, says Counterpoint Research, Apple’s share shrank last quarter, from 48% in Q2 2017 to 41% in the same quarter this year. Most of that shift seems to be due to Fitbit, which saw its own share climb dramatically from 8% to 21%.

Second, almost nine out of ten Apple Watch buyers are opting for the older and cheaper Series 1 watch over the Series 3. Counterpoint suggests that most people are only buying the Series 3 if they want the cellular model.

Despite initial hype and traction of cellular based Apple Watch Series 3 in the first two quarters, Apple iPhone users are actually choosing the Series 1 as a non-cellular option over Series 3 non-cellular model which is surprising to many industry watchers. This also shows, Apple users are choosing Series 3 preferably if they want to add cellular connectivity, else Series 1 remains the most popular model contributing to almost nine out of ten Apple Watch sold in Q2 2018. While this is great for Apple from an ecosystem perspective, from an average selling price perspective it is not the same bump as Apple would expect with newer iPhone models every year.

The key question, of course, is how that picture will change after the launch of the Series 4. 9to5Mac yesterday provided an exclusive early look at the new model. The Series 4 offers around 15% more viewable area by dramatically shrinking the bezels. A new watch face also allows nine complications in addition to the time, allowing for a lot more information to be seen at a glance.

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