Apple and Google Have Nothing to Fear From Samsung's Galaxy Gear

Samsung's (NASDAQOTH: SSNLF  ) first attempt at wearable computing, its Galaxy Gear smartwatch, looks like a failure. It isn't that consumers aren't buying the device -- it's that, of those who do, many are returning it: according to Geek.com, more than 30% of them.

Samsung has a history of releasing flawed products, then improving them substantially in future years. That will likely be the same for its Galaxy Gear. I can't imagine Samsung giving up on its smartwatch, but for now, it looks like neither Apple (NASDAQ: AAPL  ) nor Google (NASDAQ: GOOGL  ) has much to fear from Samsung's device.

The Galaxy Gear has been almost universally panned
If Geek.com's report is true, it's hardly surprising. Reviews of Samsung's watch have been lukewarm at best; most reviewers have concluded that the device's numerous faults fail to justify its $300 price tag. At issue has been a sluggish interface, poor battery life, lack of apps, and near-total reliance on whichever handset the watch is paired to.

Right now, that handset is the Galaxy Note 3, the only Samsung phone with which the Galaxy Gear works. In the coming weeks, Samsung plans to add support for some of its other phones, and maybe handsets made by other manufacturers. But it isn't clear how that would work -- the Galaxy Gear relies on Samsung's proprietary software, including S Voice and its own app store.

A successful Gear could've dealt a blow to the Android ecosystem
If the Galaxy Gear had proven to be a solid product, it could've put pressure on Google's larger Android ecosystem. Samsung already makes about 40% of the handsets that run Google's mobile operating system, and a must-have watch could've increased its market share further still: A would-be smartphone buyer, choosing between Samsung's Note 3 and Sony's competing Xperia Z Ultra, might've opted for Samsung's device as a way to get the Galaxy Gear.

Back in February, The Wall Street Journal reported that Google is concerned about Samsung's dominance. Samsung's position could allow it to negotiate a better deal with Google or fork Android totally -- removing Google's apps and services entirely. That's probably a worst-case scenario, but Samsung is clearly trying to build something of a separate ecosystem around Google's Android. Samsung held its first developers' conference on Monday, introducing five software development kits (SDKs) in an attempt to encourage developers to optimize their software for Samsung's devices.

Was Samsung trying to beat Apple to the punch?
Besides Samsung, the failings of the Galaxy Gear may have been because of Apple -- that is to say, Samsung may have rushed its Galaxy Gear to the market, hoping to beat Apple to the punch. Despite Apple's reputation for secrecy, there have been widespread reports that Apple is working on a smartwatch of its own.

If Samsung's watch had been a major success, it could've robbed Apple of some iPhone sales. Customers who want Samsung's watch would've had to buy its phone -- possibly forgoing the purchase of Apple's iPhone in the process. Moreover, it could've weighed on general sentiment, both among consumers and investors.

Samsung popularized the larger-screen smartphone, and nearly every other handset manufacturer has followed. The notable exception has been Apple, with CEO Tim Cook arguing that larger screens require unfortunate trade-offs. Regardless, the larger phones have been a hit with consumers, and Apple shareholders, including hedge fund manager David Tepper, have said the company should release a larger phone. Although Apple continues to sell millions of iPhones, eventually, the lack of a larger form factor could entice some consumers to switch.

The same might've been true for a smartwatch. Had Samsung hit a home run with its Galaxy Gear, it would've been yet another area where Apple was seen to be falling behind. With Samsung's device coming up short, it leaves the door open for Apple to make its smartwatch the first "must-have" device in the category.

Samsung's blown opportunity
Samsung had a real opportunity with the Galaxy Gear. If it had released a solid product, it could've cemented its control of Google's Android, while making Apple's (likely upcoming) watch look like a me-too product. As it stands, it appears to have released a lackluster device, one that few will buy and many seem to be returning.

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  • Report this Comment On October 29, 2013, at 6:27 PM, petergreyhill wrote:

    another damage control blowie for apple and cook, nice job - funny how american bloggers love to "pan" samsung's innovative products, and the speed with which they are released.....with the same ignorant american blogger/reviewer mentality and low iq - asian consumers love samsung and lg products because samsung and lg deliver enormous value in each and every product release. if the asian consumers don't like the first release, the product / features is / are adjusted to meet consumer demands, unlike your favored puff toy apple who could care less what their customers think.

    apple is becoming more irrelevant every day they lose market share to samsung and the other asian competitors, this is playing out now in real time as we see cook losing market share and fiddling with fringe issues, or financial gimmickry to save some face. he is obviously not suited to run steve job's profit based model because he is an old school revenue guy, and as far as "supply chain" genius well look at the incredible mistakes he has made.

    why wouldn't cook, in all his genius just give one little think to his loyal customers and investors, a full HD five inch display ? how hard can that be ? how long should that take ?

    Icahn is correct, cook is old and out of touch, he should be fired along with the entire apple board of directors.

  • Report this Comment On October 29, 2013, at 7:31 PM, webguy76 wrote:

    Is there any way that I can hide these articles from Yahoo? The Motley Fool is the biggest waste of my time that I can think of. You "writers" are hanging on to what Apple was in 2010 so bad that it is sad. Why not write about Sony in the 80's and 90's? How about IBM and Atari in the early 80's? This is the business life-cylce and it goes something like this: Company develops product that no one else has, everyone jumps on board, other companies develop a competitive product, company rests on laurels, company gets passed, 15 years later are irrelevant. Apple is washed up and is a has been company. Even my die-hard Apple friends aren't impressed with the new products. Get over it, jump on the Samsung bandwagon for a couple of years until they are passed up...

  • Report this Comment On October 29, 2013, at 7:38 PM, drinkglory wrote:

    I have the note 3 and the gear and am very satisfied with both. The Note is the tablet pc and pocket pc x 100. It is nice to have all these features and no lag! Multitasking at its best! The watch is something I never thought I would wear again. I enjoy wearing it everyday! Techie dream come true!

  • Report this Comment On October 29, 2013, at 8:25 PM, HiramWalker wrote:

    Samsung. So bad they have to pay people to write positive comments about them, and negative comments about their competition. Plus the world's largest ad budget to get the the easily swayed to buy their products... once.

  • Report this Comment On October 30, 2013, at 12:16 AM, Dethklok wrote:

    Nice copy and paste article from every other site.

    Btw, the Note 3 is no longer the only capable device. My GS4 is now fully compatible at this very moment. The updates are rolling out.

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