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 Next week, Apple Inc <AAPL.O> is expected to stride into the market
for wearable accessories that link wirelessly up to phones and
create a template for other firms that have struggled to create
products consumers would want to be seen in.
Rival electronics makers have been marketing hundreds of wearable
products over the past year, but have little to show for it in sales
despite huge hype for accessories seen as a critical boost to the
vast but increasingly saturated market for mobile phones.
Executives at Europe's big consumer electronics trade fair this week
in Berlin readily admit to hoping that Apple can crack the missing
code for everyone. Where the U.S. innovator leads, its rivals plan
to follow by bringing their own improvements or by seeking out
profitable niche markets that Apple ignores.
"If Apple offers its own product, it will expand the market," Sung-jin
Lee, Director of LG Electronics Inc's <066570.KS> watch product
planning team, said in an interview.
"This is what we wanted," Sunny Lee, CEO of Samsung Electronics'
<005930.KS> European business told Reuters when asked about Apple's
likely debut.
Media reports have pinpointed 9 September as the date Apple will
introduce its long-rumored smartwatch - a wrist device that
typically connects to a nearby phone. Expectations are high for the
iWatch, which could be the tech giant’s first brand new product
after a four-year dry spell during which it faced pressure to create
another groundbreaking consumer gadget.
So far Samsung dominates the smartwatch market, with 74 percent, but
numbers remain small. Compared to the 1.3 billion mobile phones
expected to be sold industry wide this year, just 1 million
smartwatches shipped in the second quarter of 2014, according to
market research firm Strategy Analytics estimates.
BUT WILL YOU WEAR IT?
Those kind of volumes suggest the industry remains in wait-and-see
mode, despite devoting huge marketing energy to wearable devices
that has garnered an amount of press attention disproportionate to
the number of products on the shelves.
"Ultimately, what all these companies have been doing is just public
prototyping," or testing the market, said mobile analyst Ben Wood of
market research firm CCS Insight.
So far tech companies have struggled to impress consumers in part
because younger generations who rarely wear watches but glance at
their phones instead don't see the point of a wrist-worn accessory
unless it can do something a phone can't.
Apple's arrival promises to bring fashion sense and sleek design to
a market that so far has emphasized the technology inside their
products rather than its outward usability or aesthetics, Wood
noted.
"We are in the Stone Age of wearables right now," said Wood - a
self-confessed wearables geek who has 15 such devices strewn on the
floor of his office.
While "wearables" is a flexible term that covers health and fitness
wrist bands, ear pieces, and even smart glasses or goggles, research
firm CCS Insight predicts 87 percent of the market will be
wrist-worn devices by 2018.
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It forecasts the number of wearable devices to ship will reach 135
million in 2018, up from just under 10 million in 2013. That
forecast is partly based on anticipation that Apple will enter the
market and on hit products eventually emerging.
GOLD RUSH
So far market-leader Samsung has launched five watch models
including one which can make and receive phone calls without linking
to a nearby phone. Its closest competitors, according to Strategy
Analytics' data, are Pebble Technology Corp, which holds 13 percent
of the market with its square-faced black phones offering links to
Web apps, and Sony Corp., which has 8 percent and recently launched
a new smartwatch model that look like a computer clock.
In a bid to muscle in, LG announced this week in Berlin a range of
smartwatches inspired by the design of classic Swiss watches. Unlike
many rival black and boxy devices on the market, one doesn't spot
the electronics inside at first glance.
"It is not a gold rush yet, but it has the potential to be," said
Lee, the LG watch executive, of the wearables market.
Chinese network and phone equipment maker Huawei has so far dabbled
in wearables but believes that as long as the devices are sold as
accessories to phones, rather than by shrinking phone functions to
fit inside, the category won't take off.
"A wearable should be a stand-alone product - and that may take a
while," Shao Yang, Huawei's vice president of consumer marketing,
said in an interview in Berlin.
Traditional watch makers may also benefit if tech firms find the
right mix of fashion and function.
In a recent interview, Swatch Group CEO Nick Hayek said smartwatches
might convince younger generations to start wearing something on
their wrists - making them Swatch targets at a later stage.
The Wall Street Journal and other media report that Apple’s device
is likely to come in two versions and simplify the process of making
mobile payments, but may not actually ship until next year.
Industry executives expect it to eventually also sport an array of
sensors to enable health and fitness monitoring.
(Additional reporting by Harro Ten Wolde and Klaus Lauer in Berlin,
Silke Koltrowitz in Zurich and Christina Farr in San Francisco;
Editing by Sophie Walker)
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