Can the Apple, Inc iWatch or Moto 360 Make Smartwatches a Success?

Despite a lot of buzz from the media, is there really a big enough market for smartwatches to warrant all the hype?

Aug 21, 2014 at 7:30AM

You don't have to look far to find the next rumored release of a so-called "smartwatch." Big hitters including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) are planning to make a splash in wearable technology in the coming weeks and months, or so say the "insiders." The question is why?

The notion of a mobile device strapped to our wrists has a very futuristic, Jetsons sort of appeal to it. But there are some significant hurdles to overcome, according to a recent survey, before smartwatches really go mainstream. You'd never glean that hesitancy to embrace smartwatches from the device manufacturers or the aforementioned media, but the folks that actually own them aren't overly impressed.

A few specs
Jackdaw Research conducted a survey of 2,200 smartwatch owners in both the U.S. and U.K. and found the primary function of a smartwatch is its notification capability. In other words, "pushing" alerts to a device like when an email is received. The user than grabs the nearest mobile device and checks the email or text message, or any other alerts the smartwatch owner has implemented.

The problem, however, is that very few smartwatch owners actually use the push feature, negating its usefulness. Of the survey respondents, 50% of them don't own a smartphone, which significantly reduces the value of a smartwatch. Of those who do own both a smartphone and a smartwatch, a mere 14% are set up to receive push notifications from more than two apps; a key demographic for smartwatches, according to Jackdaw's survey.

Jackdaw now says, "the current crop of smartwatches, which don't provide good response capabilities to such messages, are not a good fit for those [functions] either." So, if wearable tech users aren't utilizing alert functions, as seems to be the case today, the other fairly standard feature of smartwatches expected from Apple, Google, and Microsoft, are its fitness tracking capabilities. But there are problems there, too.

Earlier this year, Endeavour Partners conducted some research on wearables. They found exceptionally high abandonment rates for fitness trackers -- 50% of U.S. fitness tracker device owners have ditched it -- which, in addition to not utilizing the push notification feature, is about all today's smartwatches can do.

In addition to so few smartwatch owners actually using the push notification and fitness tracking features, and the high rates of abandonment -- a third of all wearable device users simply stop using them -- Jackdaw found that current smartwatches tend to have poor battery life: less than two days, on average. Add to that so-so display quality, and it becomes even harder to warrant all the smartwatch hyperbole.

To the rescue?
Based on Jackdaw's survey and other research, the smartwatch of today isn't going to cut it. It would seem that the only thing that could save wearable technologies is innovation. Apple's rumored iWatch, due in October, is supposed to come in multiple sizes and price points, improved crystal display, and 10 sensors to monitor health-related activity. For smartwatch aficionados, unfortunately, the rumored iWatch sounds like more of the same, other than a better display, rather than the cutting-edge innovation Jackdaw suggests is needed to really get the wearables market jump-started.

Not to be outdone, Microsoft is expected to take the wraps off its own smartwatch in October. However, Microsoft's foray into wearables, according to the rumors, will have 11 sensors, be compatible with other OS platforms, and have a slimmer band design with a display on the inside of a user's wrist. As for features, again, it appears as if Microsoft's smartwatch entry will be similar to all the others.

Early next month, if the infamous "unnamed sources" prove correct, Google will introduce its high-end Moto 360 smartwatch for a reported $249. Though it's expected to perform the usual smartwatch tasks -- push notifications and fitness tracking -- the Moto 360 will supposedly be waterproof for up to 30 minutes, and include a voice-activation feature. Niceties, but hardly cutting-edge innovations.

Final Foolish thoughts
While the media seems awfully excited about the rumored iWatch, Moto 360, and Microsoft's smartwatch, wearable tech owners have made it clear that the same functionality in a different package will flop. Sure, a different screen size, voice activation, and better resolution are OK, but yet another smartwatch that's little more than a glorified pager and fitness tracker that very few people use?

Until one of the big three, or a device manufacturer like Samsung, develops a smartwatch that can truly be defined as a mobile device, with value-added features that owners will actually use, predictions for an exploding wearables market aren't likely to pan out.

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Tim Brugger 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), Google (C shares), and Microsoft. 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.

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