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The smart watch market is poised to take off, and Google (GOOGL -1.23%) is about to step right into the fray. The Wall Street Journal reported yesterday that the company is ready to mass-produce a smart watch within the next few months.
Although it's been known since the summer that Google was working on a smart watch, the recent timetable of possible mass production is a new development. Though Samsung's (NASDAQOTH: SSNLF) Galaxy Gear watch is already on the market and Apple (AAPL -1.22%) is reportedly working on its own watch, Google has some significant advantages its competitors.
A watch for the common man
In order to gain quick mass-adoption rates for Android, Google gave away its mobile software to original equipment manufacturers for free. As a result, the company now enjoys 79% of worldwide smartphone OS market share. The company could take a similar approach with a smart watch by selling the device for a cheap price and make the money back through increased usage of its services.
Google has a slew of services that are all free to users, such as Gmail, Maps, Navigation, Search, Google Now, Drive, etc. Google makes a majority of its money from advertising, so it gives its products away for free in return for displaying ads.Though a Google smart watch likely wouldn't have ads on the screen, it could price the watch toward the low- to mid-range market and make its money back by ensuring people stay within its app-and-platform ecosystem.
Galaxy Gear. Source: Samsung.
Samsung made the mistake of releasing its Galaxy Gear watch only for Samsung users and at the steep price of $299. A cheaper Google watch compatible with lots of Android devices could easily overtake the Gear and ensure Android users stay within the Google bubble.
Samsung simply doesn't have the same unique services that Google does and, more specifically, doesn't have a personal assistant app like Google Now.
Google Now is rumored to be a big part of the company's forthcoming smart watch, and it's likely to give Google a leg up on any other smart watch competitor. Google Now has unparalleled real-time information and can notify users when a package is delivered, display travel time to the next likely destination, give sports updates and appointment reminders all without asking. Google Now is already used in Google Glass as well as other Android devices, and adopting the program for a smart watch would give users a better experience than any other current smart watch on the market.
Betting on a winner
Apple has long been rumored to release its iWatch, but so far investors are still waiting. Once Apple and Google both throw their hats into the smart watch ring, I still think Google may have an advantage over the iDevice maker. Apple would likely need to lean on Siri to handle certain tasks, but Siri has failed to live up to its hype. Frequent problems connecting to its server and issues understanding voice commands still inhibit Siri's functionality. That doesn't mean an Apple iWatch won't be a significant Google competitor, but Google Now already has basic elements a good smart watch would need, while Siri lags behind.
Apple would have to bring some significant upgrades to Siri to bring the personal assistant up to par. CIMB Securities analyst Wang Wanli said back in August that he believes an iWatch will debut in the second half of 2014, and that Apple could ship more than 63 million in the first year. Both of those projections are obviously speculation, but investors clearly can't count Apple out of the smart watch space. Speaking about wearable tech earlier this year, Apple CEO Tim Cook said, "I think the wrist is interesting. The wrist is natural." With so many of its competitors entering the space, it's more of question of when than if Apple will release a watch.
While Samsung already has one of the only significant smart watches on the market and an Apple device will likely have the same quality and great user interface that other Apple devices have, I think a Google watch with Google Now integration could end up being a step above the rest. The company has all the systems in place for a successful device, and has already learned a lot about wearable tech from Google Glass. If all the rumors are true, investors won't have to wait much longer to find out which watch comes out on top.
