Tag Heuer's entry into smartwatches also brings up the question of where the overall smartwatch market is headed. One concern: Could smartwatches end up being a multi-year fad, like tablets or netbooks, with a spike in the first few years, followed by a decline?
"Smartwatches are still a product under development and not the be-all and end-all," Llamas said. "There's still a lot of room for smartwatch growth, even if there's the threat of it being a niche market."
IDC in September forecast that 23.8 million smartwatches would ship in 2015, and would more than triple to 85 million by 2019. Over that period, Apple's WatchOS will control about half of the market, with Android Wear increasing from about 17% in 2015 to 38% in 2019. Compared to smartphones, which will ship 1.4 billion units in 2015, smartwatches are relatively insignificant, but they are still shipping "in the millions," Llamas noted.
"We're still at the early stages of the smartwatch market," Ubrani added.
What about the smartwatch killer app?
For smartwatches to catch on in a bigger way, they will need killer apps — compelling apps that users will associate as especially valuable with the small wristworn devices.
Killer apps for smartwatches could turn out to be short messaging apps, made possible with a small, wearable form factor that is easier to access than, say, a smartphone, Ubrani said.
By messaging, Ubrani was referring to the ability to draw on the touchscreen of a smartwatch and send that drawing or emoji to another person wirelessly.
Google in April launched the Google Handwriting Input app for texting and creating emojis on Android OS devices. In May, Google announced at Google I/O that Android Wear would also support drawing and sending emojis, like a smiley face, from an Android Wear smartwatch. Android Wear sends the emoji as a refined drawing to the recipient. By comparison, with the Watch OS, users can send small drawings in their original form.
Ubrani said the future of the smartwatch will depend heavily on developers finding and creating killer apps and services. "The smartphone-on-a-wrist won't happen," Ubrani predicted. "Developers have to find the right apps and use-case scenario. Our types of interactions via smartwatches will change. Messaging will be big."
For now, the ability to text via a smartwatch will be primarily through voice input to the smartwatch, which is then converted to text, with the Bluetooth-connected smartphone probably making that voice-to-text conversion.
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