Google (GOOG +10.06%) is taking another step toward a profitable 2014 with its Android Wear smart watches, mobile computers that can be worn like wristwatches. Last week, Google introduced Android Wear smart watches that provide real-time news updates, health and fitness tracking, and the ability to control both smartphone and non-smartphone appliances like garage doors, thermostats, and smoke detectors. These smart watches are designed to meet consumer demand for fashionable, functional technology, and could give Google an additional revenue stream to help increase profits.
What are Android Wear smart watches?
Imagine if you could start your car remotely with your wristwatch. This is just one of the experiences that Google wants to deliver through its Android Wear smart watches. Smartphones give users the ability to talk, text, and tweet from anywhere at any time; a smart watch takes smartphone technology a step further, allowing users to wear a tiny supercomputer that's no bigger than an ordinary wristwatch and stay connected to family, friends, news outlets, and more.
Android Wear smart watches go beyond everyday wristwatches by allowing people "to get glanceable, actionable information at just the right time throughout the day," according to Google. As "technology that moves with you," Android Wear smart watches enable consumers to access mobile apps, monitor their health and well-being and, of course, tell time. In fact, saying, "OK Google," followed by a voice command gives users the opportunity to get real-time answers to many questions.
To develop its smart watches, Google is partnering with LG, Asus, HTC, Motorola, and Samsung. Meanwhile, this announcement will impact Google, Apple (AAPL +0.30%), Sony (SNE +1.57%), and each of these tech companies' respective shareholders.
Google's foray into the smart watch market will have far-reaching effects. European think tank iDate reports that there were 175 million Internet-connected devices, excluding smartphones, tablets, and computers, used worldwide last year. Additionally, the market for these devices was worth $33 billion, and this figure could rise if Google and other tech companies invest in smart watches over the next few years.
Evaluating the smart watch market
Keep an eye on the smart watch market this year. With Android Wear, smart watches, and other innovative gadgets reaching the market, Google, Apple, Sony, and other tech companies could profit.
In 2013, Google's stand-alone revenue rose 22% to $15.7 billion. If smart watches become as popular as many tech experts anticipate, Google and its shareholders should expect another strong year in 2014.
"We ended 2013 with another great quarter of momentum and growth," said Larry Page, CEO of Google. "We made great progress across a wide range of product improvements and business goals. I'm also very excited about improving people's lives even more with continued hard work on our user experiences."
Tech investors would be wise to watch how Apple and Sony respond to Google's Android Wear smart watches. Apple has not set a release date for its much-anticipated iWatch , or even confirmed the device's existence. Depending on Google's success in the smart watch market, however, the pressure could increase for an iOS-friendly smart watch.
Sony also is a strong bet for 2014. The Sony SmartWatch 2 is priced under $200, making it a cost-effective choice for consumers. Sony could release a new version of this smart watch, the SmartWatch 3, in the next few months. As Sony seeks new ways to stay ahead of the competition, the company's stock could be on the rise.
How to invest in the smart watch market
When choosing between Google, Apple, and Sony, Google may be the best bet among tech companies that are (or could become) involved in the smart watch market. Google is likely to release its Android Wear smart watches this summer, but investors should keep in mind that smart watches are only a small part of Google's business strategy. If Google hits the mark with its smart watches, however, this company could get a minor boost to profits in 2014.
