Can Apple iWatch Leap Past Samsung and Fitbit?

Apple (NASDAQ: AAPL  ) takes a tight-lipped approach to development products until the company's ready for the big, flashy unveiling. But The New York Times ran a profile of CEO Tim Cook this week that all but officially confirmed a smartwatch release later this year, which the rumor mill has nicknamed the iWatch. Samsung  (NASDAQOTH: SSNLF  ) currently dominates that market -- and fitness bands from FitBit and Garmin (NASDAQ: GRMN  ) provide additional competition -- so will the iWatch snatch significant market share? 

Smartwatches tend to combine the functionality of a PDA with a fitness tracker. But this emerging market is still finding its footing ... as the mixed reviews of Samsung's Gear devices have shown. And there's an argument for the fact that the PDA aspects are redundant to smartphone users, who would benefit more from buying a simple fitness band such as FitBit or Garmin's Vivofit. 

So where could Apple's iWatch fit into the market? 

Source: Samsung 

Shaky growth market 

The smartwatch market has started to rise, albeit on shaky legs. NPD Group reports that the Samsung Gear accounted for 78% of the $98 million smartwatch market that has amassed since last October. Pebble came in second with an 18% share. Why does Samsung have such a clear lead and what does that mean for Apple?

The same reasons Samsung leads the smartphone market: availability and pricing. Samsung offered the Gear in packaged bundles with two of its popular smartphones over the holidays. And those bundles helped drive the average smartwatch selling point down to $189, according to NPD. 

An NPD survey resulted in 20% of respondents expressing an interest in purchasing a smart watch, but price was listed as the top deciding factor. Apple tends not to beat the competition on price, which is a large part of the reason Android has dominated the smartphone market. But Apple could still win with quality. 

Problems abound with Samsung's Gear line, which recently launched a revamped version that received mixed reviews due to a lack of apps and problems with the fitness trackers. The iWatch is bound to have better apps available and if Apple can perfect the fitness tracker aspects, the iWatch could leave Samsung in the dust. 

But would that combo prove more popular than regular fitness bands? 

Rise of the fitness bands

Source: Fitbit

ABI Research notes that activity trackers, or fitness bands, outsold smartwatches four-to-one in 2014's first quarter. And the research firm predicts 10 million trackers to ship this year compared to 7 million smartwatches.

Privately owned Fitbit and GPS-maker Garmin lead the fitness band market. Garmin's first-quarter report showed the fitness segment accounting for 17% of total net sales. And Samsung recently jumped into fitness bands with the release of Gear Fit.

Consumers may continue to prefer fitness bands due to the lower cost, better functionality, and clearer purpose. And the expansion of the fitness band market could compress the growth potential of smartwatches.  

But Apple doesn't dabble in low-end devices so the iWatch will serve as the company's strong push into wearable devices ... come what may. 

Foolish final thoughts 

Tim Cook's still proving his merit as the successor of iconic CEO Steve Jobs. The iWatch will likely top the previously released smartwatches in terms of quality and functionality. But a high price point might send all but the company's most devoted followers to the fitness band rack.

Leaked: Apple's next smart device (warning, it may shock you)

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (1) | Recommend This Article (1)

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.

  • Report this Comment On June 19, 2014, at 5:34 AM, xMattPerkins wrote:

    I don't get how people can say Samsung leads the smartwatch market. Yes Samsung has SHIPPED more smartwatches than any other smartwatch maker, but I believe Pebble sold more. And last I checked number sold mattered more than number shipped.

    But this is the reason Samsung refuses to list their units sold. They know editors are gonna take units shipped as sold. If editors refused to mention Samsung products unless they listed how many they SOLD, then Samsung would be forced to list their sales numbers. And the fact Samsung won't release sales numbers has to make you question how many devices they actually sell compared to how many they ship. It's prolly like for every million devices Samsung ships, they sell less than 500,000 of those devices. It's like when Apple announced their 10 million iPhones sold, Samsung boasted they shipped 10 million Galaxies but they wouldn't say how many of those 10 million shipped that they actually sold. Obviously it was less than Apple's 10 million sold.

Add your comment.

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: 2998777, ~/Articles/ArticleHandler.aspx, 8/28/2015 11:09:13 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...

Brandy Betz

Brandy Betz has written for The Motley Fool since 2011 and primarily covers health care, ETFs, and dividend stocks. You can follow her on Twitter @BrandyBetz.

Today's Market

updated 1 hour ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

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

8/28/2015 4:00 PM
AAPL $113.29 Up +0.37 +0.33%
Apple CAPS Rating: ****
GRMN $37.99 Down -0.17 -0.45%
Garmin CAPS Rating: *
SSNLF $875.00 Up +25.00 +2.94%
Samsung CAPS Rating: ***