Smart Watch – Which watch to watch

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There are still too many reasons why this won’t work.

  • Wearable technology is not a new idea; it is just that no one has managed to create any with mass market appeal.
  • Remember the Microsoft SPOT watches from 2003? (Click here if you can’t)
  • Another example is the older generation of the iPod Nano which came with a wrist strap and a clock function but it never really caught on.
  • I suspect that a combination of short battery life and the fact that one had to turn it on to get the time was a factor in its demise.
  • However, I think the biggest factor was the fact that watches are major items of fashion and Apple is not a fashion brand.
  • This, I believe will be the single biggest factor limiting the appeal of smart watches beyond the geek crowd.
  • There are endless rumours circulating about how Apple has 100 people working on a smart watch through Microsoft ordering components to Samsung tinkering with prototypes.
  • At this stage all they are doing is experimentation and I do not believe that there are firm plans to launch products.
  • This is because the evidence is that in their current form, smart watches are unlikely to sell.  
  • The one that comes closest is the Martian Passport Watch.
  • To me, this is because it can almost pass as a regular watch and will function as one when the user glances at it just to know the time.
  • In my mind there are three criteria that need to be met before this segment will fly.
    • First. A smart watch needs to offer functionality that adds utility. i.e. it needs to do something more than act as a mini-screen and remote control for a smartphone.
    • Second. A smart watch needs to tell the time with exactly the same ease, reliability and battery life as a regular watch.
    • Third and most important. A smart watch must be seen as fashion item. This, I suspect, will require the involvement of the big brands who, so far, are conspicuously absent from this whole wearable technology fad.
  • Fulfil all three of these requirements and I can see the segment taking off but until then it is likely to remain the realm of dreams and white elephants.

 

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.

Blog Comments

Really good insights, especially to three-bullet-list at the end. As an investor in this space I have been wondering what the consumer value proposition would really be. It is interesting to see how the Pebble users really will see the watch in real-life – that is a great test for smart watches.

Many thanks….Think the pebble will fail against criteria one and three. dont know about two.

Agree to an extent. Apple is a fashionable tech brand with great exterior design. The nano came with watch faces but not a wrist band; it was not designed as a watch. Apple designs its gadgets to work well together but to function independently. 1 and 3 are relatively easy. But at the expense of 2.

Agree…but you need all three to make it fly…I suspect that someone will come up with the answer….I think though that 1 is more difficult than it sounds…I havent seen anything fulfils 1 in my view

I think the 3 criteria can be fulfilled:

(1) Smartphone screens are getting very large – they will increasingly be less convenient to remove from your pocket, bag, pouch and used one-handed. Glance-able, wrist-based updates that convey *real* info could be very useful.
Wearable devices might have their own sensors (heart-rate) conveying info to the smartphone.

(2) The main concern here is about readability and battery life. Technologies such Bluetooth 4 (Bluetooth Low Energy) and Colour e-ink displays such as Mirasol, Liquavista may possibly address these types of concerns.

(3) Luxury watches tend to cost £1500 or much much more, they are status symbols in a certain price bracket and sell in limited volumes – especially watches like Hublot, Franck Muller, Patek Phillippe etc. Fashion watches bearing the name of an established fashion/sports brand tend to be at £200-£900 and sell in relatively high volumes. Smart watches priced at between £200 and £500 should be able to compete in this segment because they provide functionality and will become fashion items in themselves just like phones.

Dont disagree….I am looking forward to seeing the products…none have appeared yet!,