Why Apple's Stock Fell following Its Fiscal 2Q16 Results

(Continued from Prior Part)

Average daily sales rose 250% last month

Apple (AAPL) decided to slash Apple Watch prices last month. Average daily sales rose 250% sequentially, according to new metrics from Slice Intelligence. The research company stated that Apple’s decision to cut the wearable’s price entry by $50 was successful, at least in the short term. The entry price of the 38-millimeter Apple Watch came down from $349 to $299.

The company also announced new brands and styles alongside the price cut. However, the prices for the stainless steel and gold editions of the Apple Watch didn’t change.

Segment is expected to grow long term

According to market research company International Data Corporation (or IDC), the wearable smartwatch market will see strong sales in the coming years. The Apple Watch is expected to drive revenue through 2020.

The IDC expects the Apple Watch to command a 49.4% share of the smartwatch segment in 2016, with estimated sales of 14 million units, far ahead of the Android Wear (GOOG) (GOOGL). The Android Wear is projected to be in second place, with a 21.4% share and 6.1 million units.

According to a recent forecast, the Apple Watch accounted for 63% of total smartwatch shipments in 2015. However, the company didn’t disclose official sales figures. IDC expects the Apple Watch to account for 37.6% of smartwatch sales in 2020, with 31 million units. It will be followed by the Android Wear, which is expected to garner a 35% share with 28.8 million units.

Since the smartwatch segment will likely experience exponential growth in the next few years, Apple is poised to become a market leader in this segment.

According to research company Canalys, Apple shipped 12 million smartwatches in 2015. This shows that Apple controls 67% of the total smartwatch market. In November 2015, Canalys reported that Apple had shipped 7 million smartwatches since Apple Watch’s launch in April 2015.

Canalys’s estimate of 5 million shipments during the holiday season puts Apple well above its rival companies such as Korea’s (EWY) Samsung (SSNLF) and Pebble.

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