Will AT&T's Wearable Predictions Ring True?

Wearable tech needs to leave its smartphone and tablet counterparts behind. Source: Samsung

This week AT&T (NYSE: T  ) purposefully, or possibly inadvertently, made two wearable technology predictions. The predictions come on the heels of Google's (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) I/O Conference, where the latest Android Wear tech was launched, and just as Apple (NASDAQ: AAPL  ) is gearing up for a wearable launch this fall.

But if AT&T is right, we're still a bit away from getting the mass market to adopt wearable technology.

Fully connected devices
Glenn Lurie, who's the president of emerging devices at AT&T Mobility, said this week at the MobileBeat Conference that he thinks we'll see wearable devices that fully connect to mobile networks on their own (i.e., not needing to pair with a smartphone) later this year, and that those types of devices will be the ones that will get the mass market to adopt wearable tech.

"It needs to be an independent device. It needs to do something different for the end user, for people to buy it en masse," he said.

So far, Samsung's (NASDAQOTH: SSNLF  ) Gear lineup, Google's Glass, and LG and Motorola's smart watches all require pairing with a smartphone to complete major functions. Lurie's open-ended answer about a coming wearable device that connects on its own has lead many to believe he was talking about Apple's upcoming smart device.

The Moto 360 running Android Wear. Source: Motorola

Obviously we don't know if that's what he meant, or if he even knows anything about Apple's device, but it does point to one main issue with current devices -- they aren't built to work alone, and that's hurting the wearables market.

The unwearing of wearables
Research from Endeavour Partners says that within six months after purchasing a wearable device a third of Americans stop wearing it. Clearly, that's bad news for companies creating these devices.

To be fair, it's not clear if users stop wearing their devices because they require smartphone pairing, but I think we can assume that adding any extra barrier to a device makes it that much less likely to be used. Lurie thinks the wearable market can change if the technology can be independent from a host smartphone. He would obviously want such connectivity considering he works for AT&T Mobility, but he may be right nonetheless.

Foolish takeaway
I've voiced my opinions before about the benefits of wearables -- particularly smart watches -- but also my skepticism to see these devices on the wrists of millions of people. There's massive potential in the wearables space, but as the devices stand right now, I don't think they do enough for the mass market to justify spending around $300 for something their smartphone already does.

Juniper Research estimates $19 billion in wearable device revenue by 2018, up from just $1.4 billion in 2013. For that to come true, I think the wearables landscape will need to shift significantly over the next few years.

Considering Apple is one of the only major tech companies who hasn't released their wearable device yet, I think that gives the company an advantage. If Apple goes against the current trend and makes an iWatch as a stand-alone device, it could not only help differentiate itself in the market, but also help spur mass-market adoption.

We'll find out whether or not Apple goes that route in a few months. But I think it's clear that as current wearable owners drop their devices into junk drawers after just a half-year of use, the wearable tech revolution needs to look much different than it does now -- and hopefully Apple is the company to bring us there.

If you're bullish on wearables, this stock is for you
Wearables is poised to be huge market, even if it needs a bit of fine-tuning right now. And there's one company that's in great shape to benefit from it when that happens. This small stock's technology can already by found in the latest wearable devices, and there's plenty of room for growth. To find out more about investing in wearable tech, and this one company, just click here.

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  • Report this Comment On July 09, 2014, at 8:29 PM, hank321 wrote:

    The issue of connection to a smartphone is not the salient point from my perspective. The important issue is that the wearable device must do something that the neither phone, nor the legacy watch, does not do---there must be some extra, some COMPELLING, functionality.

    This functionality, in the case of AAPL, probably resides in the sensors, and in the APPs that collect and synthesize the data collected from the wearable's sensor array. These will center around issues of health and fitness, and employ trend analysis over time. That is my anticipation.

    Will this capability be valuable to certain people? Darn right it will, especially amateur and professional athletes of all descriptions,....their fans,...and also, those with health issues, a distinct group, but with similar monitoring requirements. How many folks fit one or both of these targets,....? MILLIONS

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Chris Neiger

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage.

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