Can Sony Win the Wearables Market?

Sony (NYSE: SNE  ) recently launched the SmartBand SWR10, a fitness tracker squarely aimed at a market dominated by Fitbit's Flex, Jawbone's UP, and Nike's FuelBand. Those three brands accounted for 97% of the entire fitness tracker market in 2013, with Fitbit claiming 68% of all devices sold.

Sony's SmartBand. Source: Sony

Considering the saturation of the market and a notable shift toward smart watches (which Sony already produces), launching the SmartBand was an odd move for Sony. On one hand, it's competitively priced at $99, it's waterproof, and has a battery life of two weeks. But on the other hand, the SmartBand lacks a heart-rate monitor -- a frequently requested feature in wearable devices.

But the SmartBand has a few key features indicating that it may have stronger sales potential than most people realize.

A timeline for personal activities
Companion apps for fitness trackers sometimes ask users to manually input what they eat to provide additional health data.

Lifelog, the SmartBand's companion app, records a wider array of activities by tracking a user's daily activities on the phone via Bluetooth. These include typical fitness-tracker activities like steps taken, total time running, calories burned, and hours slept. But Lifelog goes a step further and also records time spent on social networks, numbers of photos taken, time spent playing games, reading books, and browsing the Internet. This data could help users cut down on sedentary behavior -- one of the leading causes of obesity.

Sony's Lifelog. Source: Google Play

All of these activities are then logged on a timeline for a user to browse through later. Users can also create "Life Bookmarks" by double-tapping the SmartBand's single button to take a snapshot of the current activity.

Taking on Samsung
SmartBand and Lifelog are compatible with all Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) Android phones, which account for roughly 80% of all smartphones worldwide.

Samsung (NASDAQOTH: SSNLF  ) offers a similar health-tracking app known as S Health on its flagship Galaxy phones. The catch is that users need both a Galaxy phone and a Galaxy Gear smartwatch to unlock S Health's full potential. By itself, Samsung controls 31% of the global smartphone market, second only to Apple (NASDAQ: AAPL  ) -- indicating that it could eventually declare independence from the Android ecosystem. Furthermore, Samsung has already replaced Android on its Galaxy Gear watches with its own open source OS, Tizen.

Since Samsung's strategy has turned S Health into a proprietary platform, it makes Sony's SmartBand and Lifelog -- which are compatible with all Android 4.4 devices -- much more appealing.

A unique take on smart watches
Samsung's Galaxy Gear watches cost between $150 to $300 depending on the model, and the new Galaxy S5 costs $600 without a contract. Meanwhile, fitness bands from Fitbit, Jawbone, and Nike generally cost between $99 to $150. This makes SmartBand one of the cheapest and most versatile fitness tracking options on the market.

Sony's SmartBand also offers a spartan way to compete against smart watches -- a simple vibrating function notifies the user of any missed notifications on the phone. Notifications can simply be dismissed by tapping the SmartBand's button. This makes the SmartBand an appealing device to customers who think that checking notifications and tiny messages on a small smartwatch screen is redundant when the phone is within reach.

SmartBand also addresses the redundancy of putting poor quality cameras on smart watches, as Samsung has done, by simply allowing users to take smartphone pictures via the SmartBand's button -- ending the need for those dreaded arm-length selfies.

The Foolish takeaway
Sony's SmartBand has plenty of strong selling points, but it has one potentially fatal weakness -- a lack of cohesive connectivity to other apps, services, and devices.

Apple, Google, and WebMD recently outlined visions for a future where data from fitness apps, medical devices, and wearable devices are all united on a single dashboard. Sony's Lifelog has a lot of potential in that department with future updates, but it could become redundant when Google Fit, the company's answer to HealthKit, arrives.

Sony's SmartBand must be compatible with Google Fit if it intends to remain competitive with Fitbit and Jawbone on Android devices. But without Lifelog, the SmartBand loses its competitive edge against Fitbit and Jawbone.

In conclusion, Sony's SmartBand is an interesting attempt to expand into the growing market for wearables, which Canalys forecasts will rise from 8 million global shipments this year to 45 million shipments by 2018. But it's still too isolated to make much of an impact in a market where dozens of companies are fighting for a tiny 3% share unclaimed by Fitbit, Jawbone, or Nike.

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