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Smartwatches arrive before their time

Matt Hamblen | Jan. 8, 2014
Intel's approach cuts smartwatch dependency on smartphones.

Patrick Moorhead, an analyst at Moor Insights & Strategy, said Intel's smartwatch is interesting because it can be autonomous, but it will be a challenge to market because consumers will probably need to buy a second phone number and data service plan for the watch in addition to a smartphone.

If Intel's smartwatch prototype can catch on, it would provide differentiation in an early market, and "that truly does change the game," Moorhead said.

Having a smartwatch that can run independently of the smartphone could make smartwatches appealing to more consumers "and not just the techies show like gadgets," said Jack Gold, an analyst at J. Gold Associates. "Most of the current crop of smartwatch devices are really just experiments to see what the market will buy."

Kunimasa Suzuki, president and CEO of Sony Mobile Communications, holds a Sony Core fitness tracker during a presentation at the International CES show in in Las Vegas on Monday. The wearable device will be able to record data about the user's activities and movement and display the information in a LifeLog app. (Photo: Steve Marcus/Reuters)

A smartwatch that operates independently of a smartphone is a wise direction for manufacturers, Milanesi said. "Being a notification hub will not be enough to win in this space."

AT&T sells both the first-generation Pebble and the $300 Galaxy Gear smartwatch from Samsung, which must be paired via Bluetooth to certain Galaxy devices. It has a camera, microphone and speaker and about one-half a gigabyte of storage to hold photos that are synced to the phone. Phone calls can be taken on the Gear watch but only in a speaker mode with the phone establishing the cellular connection. That means truly private voice conversations are almost impossible.

Moorhead had expected Samsung to announce an updated version of the Galaxy Gear at CES, but said Samsung will probably wait until late February at Mobile World Congress in Barcelona, when Samsung is expected to launch the Galaxy S 5 smartphone.

Reports indicate that 800,000 Galaxy Gear smartwatches have sold since the device launched three months ago, but Moorhead said there is still a lot of Gear inventory waiting to be sold. "It's a bit of a disappointment that Samsung didn't announce their new watch, but with all that inventory sitting on the shelf, I don't think they are motivated to bring out something new," he said.

Some analysts are taking a wait-and-see approach to smartwatches, and said that CES will include some smaller vendors at a "Wrist Revolution" area on the show floor, which officially opens Tuesday.

Research firms Canalys and Gartner have put the number of smartwatches that will ship in 2014 at 5 million and up to 7 million, respectively, up from 500,000 that Canalys said shipped in 2013. That growth rate is phenomenal for an early-market technology, but is just a tiny fraction of the 1.3 billion smartphones that analysts believe will ship in 2014.


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