Is Nokia Jumping on the Smart Watch Bandwagon?

Nokia (NYSE: NOK  ) may be smack-dab in the middle of having its devices and services division being bought up by Microsoft (NASDAQ: MSFT  ) , but that hasn't stopped rumors that the company may launch a smart watch later this month.

Though it's unclear why the device would be introduced so close to Nokia's sale of its devices to Microsoft, the fact that it exists may be a boost for Microsoft's mobile ambitions.

Samsung Galaxy Gear. Source: Samsung.

Competing timelines
Samsung launched its Galaxy Gear watch just last month, and Apple (NASDAQ: AAPL  ) is widely expected to launch a watch sometime in 2014. While Samsung is one of the first companies with a smart watch for the mobile era, reviews of the device have been less than stellar. As David Pogue from The New York Times said, "Nobody will buy this watch, and nobody should." One of Samsung's own executives said "it lacks something special." But the smart watch segment is in its infancy and not every player has emerged yet.

An analyst note from Piper Jaffray's Gene Munster said that if Apple releases an iWatch, it could only expect to sell 5 million to 10 million units in the first year. That's in stark contrast to Morgan Stanley's Katy Huberty, who estimated last February that an iWatch could sell between 50 million to 150 million units a year. Obviously, neither one of them knows for sure how many iWatches Apple could sell, but what investors should take note of is how many tech companies are moving into this space, and that Microsoft can't afford to miss out on this. 

A Nokia smart watch may not make a whole lot of sense considering the company's current position, but that doesn't mean Microsoft can't benefit from it. If Nokia has been working on such a device, then it would be included in Microsoft's purchase and help the company move into the wearable-tech space. Over the summer, rumors surfaced that the Redmond-based company was working on its own watch, but using some existing ideas from Nokia could help speed up that entry.

In order for Microsoft to make inroads into wearables, it'll need to launch such a device with the Windows Phone operating system. If Nokia uses something other than Windows Phone for its smart watch, Microsoft will need to retool it with its own OS. The company needs to create a cohesive experience with its mobile devices, and a Nokia watch will eventually need the same Microsoft feel. For now, investors will have to wait and see if Nokia launches the product later this month, if at all. If it does, Microsoft investors should be cautiously optimistic some iteration of the device would eventually come through the Microsoft pipeline.

A better bet on mobile
Microsoft hasn't had a lot of wins in the mobile space, but its rival Apple certainly has. The interesting thing about Apple is that it has no problem creating a revolutionary product and then completely replacing it with something else. To find out how Apple could do that again read our free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2674187, ~/Articles/ArticleHandler.aspx, 9/30/2016 6:30:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
AAPL $113.05 Up +0.87 +0.78%
Apple CAPS Rating: ****
GOOGL $804.06 Up +1.42 +0.18%
Alphabet (A shares… CAPS Rating: *****
MSFT $57.60 Up +0.20 +0.35%
Microsoft CAPS Rating: ****
NOK $5.79 Up +0.07 +1.22%
Nokia CAPS Rating: **