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.
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.
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