Despite steady growth in the overall smartwatch market, Apple's market share dropped to 43.35 percent during Q2 and Q3 of 2018 -- its lowest point since the same time in 2017, ABI Research has said.
It is still ahead of competitors, with Fitbit, Huawei, and Samsung each owning only around 8 percent market share respectively.
With the release of Apple Watch 4 in September, the Cupertino tech giant should remain at the top of the smartwatch market for the foreseeable future. The new Apple Watch offers the usual notifications, fitness and heart rate tracked, optional LTE, and Siri, but has also added new features such as fall and ECG sensors that Apple's competitors do not have, ABI added.
Earlier this week, Apple CEO Tim Cook noted that wearables grew by almost 50 percent year-over-year, thanks to holiday sales of the Apple Watch and AirPods.
However, smartwatch offerings from companies such as Fitbit, Huawei, and Samsung are sold at a much lower price-point, resulting in a more difficult decision than in the past for consumers tossing up between which smartwatch to buy.
As more competitors enter the smartwatch market, with Huami releasing multiple smartwatches in 2018 at different price-points, ABI Research predicts that smartwatches will see shipments increase by more than two-fold -- from 40 million in 2018 to over 99 million in 2023.
"The smartwatch market is a major part of the overall wearables market, offering consumers access to a large number of wearable features, such as fitness tracking, notifications, and heart rate monitoring, from the wrist," says Stephanie Tomsett, research analyst at ABI Research.
"As the number of flagship and budget smartwatches continues to grow, consumers are increasingly opting for devices from companies other than Apple, such as Fitbit, Huawei, and Samsung. Hence, Apple has seen its market share drop over the past couple of quarters."
Earlier this week, Apple announced it has cut its revenue targets to $84 billion -- about $7 billion below Wall Street estimates. Cook blamed lower demand in China, supply constraints of new products, and weak iPhone upgrades in many markets.
"As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed," Cook said.
Apple's revenue warnings resulted in its shares dropping more than 7 percent on Wednesday, dropping its market value to less than $700 billion. Apple in August had become the first company to gain a valuation of over $1 trillion.
Meanwhile, Huawei has continued to grow despite tensions between China and the US. The Chinese tech giant's revenue grew over 17 percent to $47.8 billion over the first half of 2018.
Revenues will come in lower than a year prior, Apple warned, due to a rough economic climate in China and fewer iPhone upgrades than expected.
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