Will Smartwatches Ever Be Cool?

Smartwatches aren't cool. Can some company please fix this issue?

Aug 17, 2014 at 12:00PM


Cool status: not confirmed. Samsung's Galaxy Gear watch. Source: Samsung

Last year, a commercial for the Samsung (NASDAQOTH:SSNLF) Galaxy Gear promoted the promise of the smartwatch through a litany of sci-fi and pop-culture shows including Dick Tracy, The Jetsons, Knight Rider, and Inspector Gadget. Interestingly enough, since the late 1940s we've regularly had TV and movie characters with some form of cool and connected gadget attached to the wrist.

The commercial succeeded, in part thanks to a simple and elegant slogan: "After All These Years. It's Finally Real." What followed was a massive groundswell of support for anything smartwatch-related. As far as the success of the device ... well, not so much. And that's just the problem -- smartwatches have never lived up to their potential.

The leader: Samsung's awful release
If Samsung's release had anything in common with the characters features in its widely praised commercial, it would be Inspector Gadget without his niece Penny to save the day. The TV spot was followed by lost momentum and sluggish sales. Following a litany of poor reviews for the Galaxy Gear, Geek.com obtained a shocking internal memo from Best Buy that outlined an extremely high return rate where for every three devices that left the store, one came back.

Samsung didn't help things with its tone-deaf boast of 800,000 smartwatch unit sales in the first two months. If true, that would be a decent success in terms of devices sold. However, upon further inspection it appears Samsung was counting devices shipped rather than those actually sold, which is the ultimate test of a device's popularity. Reuters pegged that sales number at just 50,000, a failure by most standards.

To be fair, a Strategy Analytics report cited the Galaxy Gear as the most popular smartwatch sold in 2013. The report also noted that nearly 2 million smartwatches were shipped last year in total, with 1.2 featuring Google's Android ecosystem. So not exactly a total failure after its disastrous rollout, but certainly not a win like Samsung's Galaxy line of phones.


Looks cool to me, but will it sell? Motorola's Moto 360. Source: Motorola

The followers: everyone else
The rest of the smartwatch market can be divided into two categories: Android-based devices and device-agnostic units. Among the notable Android-based contenders is the Motorola Moto 360, which appears to have a form factor that harkens to classic watch styles instead of the new rectangular bezels smartwatch users are accustom to seeing. In addition, it appears to have a traditional analog time display, with a digital overlay for smartwatch features.

LG Electronics is also throwing a wrist into the competition with its newest Android-based unit, the G Watch. This appears to be a "me-too" device that offers many of the same benefits that Samsung's Galaxy Gear does. This comes across as an Android-based play for people who don't like Samsung.

And then there are smartwatch makers that have gone device-agnostic to both work with Android and iOS. One highly rated unit is Pebble's smartwatch line. A strong following, plus money from Kickstarter, helped this company to grow. That said, device-agnostic watches can have problems with communication to operating systems.

Another issue with these entrants is a question of demand. Is this a product in which sales are being driven by need-based demand or by that cool factor? The answer, I believe, is brand cache, and affinity will drive sales more than actual functionality and value.

The eagerly awaited entrant: Apple
Lost in all this is Apple, which hasn't brought a smartwatch to market yet. However, according to numerous reports, it appears the company is preparing to do just that. The newest rumors point toward a dual release with Apple's newest iPhone iteration -- the iPhone 6 -- on Sept. 9.

If so, it is very possible for Apple to quickly jump to the top of the heap of smartwatch sales. While estimates vary widely, the highest figures put Apple moving nearly 60 million units in the first 12 months of production. Remember that in 2013 the entire smartwatch market only sold approximately 2 million devices.

How can Apple do this? First, it must make the actual device cool. Where Samsung has failed is in its attention to user functionality. And that's where Apple excels. From the initial iteration of the iMac, the company has always kept an eye on the end user. And you don't have to be Dick Tracy to see that this is what the smartwatch market needs.

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!

Jamal Carnette has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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