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Apple shipped 3.5 million Apple Watches last quarter, according to Canalys, but its market share is shrinking.

From a press release issued Thursday:

“Apple’s decision to expand internationally with operators has quickly reaped rewards in Asia Pacific,” said Canalys Senior Analyst Jason Low. Since the launch of the Apple Watch Series 3, Apple has formed partnerships with operators in Australia, Japan and Singapore, with Thailand, India and South Korea added in the last quarter. “Operators in these markets are willing to resell connected devices other than smartphones that can help them generate extra revenue from data services. India is a surprising addition to the list of countries. But this is a good strategy by Airtel and Reliance Jio to retain their high-value customers in a bid to minimize churn in a cut-throat market.”

From the same release:

“Apple faces a growing threat from competitors, which have started to pass the million quarterly shipments mark,” said Canalys Research Analyst Vincent Thielke… Amid further competition from Samsung and Google, rumored to be launching Galaxy and Pixel watches respectively, Apple needs to work out how to drive refreshes in markets such as the US, where its penetration into the existing iPhone installed base has started to level off.”

My take: We’ve seen this movie before. Apple creates new market, owns it. Fast followers rush in with cheaper alternatives. Apple’s market share shrinks; its profit share does not.