Samsung's Galaxy Gear smartwatch has ruled the market, but things may change quickly. Source: Samsung.
Tech analysts and Apple (AAPL +0.30%) fans everywhere are waiting for Apple's Tuesday event with bated breath. Widely considered to be the release event for Apple's flagship product -- the iPhone 6, which will be the newest iteration of its iPhone line -- the Internet is buzzing with speculation on features and speculations.
In addition, if rumors are to be believed, Apple seems intent to make this a multiple-product rollout. In addition to releasing two variants of its iPhone 6 unit -- a 4.7-inch and 5.5-inch model -- speculation is that Apple will introduce a new iPad Air at the event. And, of course, there's Apple's long-awaited new product: the smartwatch dubbed iTime. But what does this mean for Samsung's (NASDAQOTH: SSNLF) Galaxy Gear smartwatch?
Samsung's Galaxy Gear is a leader
According to the recently formed intelligence firm Smartwatch Group, Samsung's Galaxy Gear is the clear leader in hardware, boasting a 34% market share in 2013. For perspective, no other vendor has 10% of the smartwatch market. The next-closest vendor, Nike, raised eyebrows when a large staff layoff prompted allegations that the company was abandoning actual hardware and opting for a software-only future. Nike denied the report but didn't specifically mention that it was keeping its hardware business.
So until now, Samsung hasn't really had serious competition in this category. The Smartwatch Group doesn't delineate between fitness-centered watches and wearables and standard smartwatches, but when one strips out the fitness wearables, the results are even more stark.
Coming in at No. 5 is the first true standard smartwatch competition to Samsung's Galaxy Gear -- Sony's SmartWatch. When compared on a revenue basis, Samsung sold $240 million worth of watches in 2014, whereas Sony sold an estimated $50 million.
If estimates are true, Samsung will lose its market dominance -- and quickly
Apple appears to have issues bringing its product to market. Recently, supply-chain analyst Ming-Chi Kuo said he expects the watch to come out in early 2015; subsequent reports seem to back that view up by stating that the device will be introduced at the event, but not shipped until later. While that may seem to be a rather long wait, fellow Fool Evan Niu has an interesting take on this early announcement.
Although predicting new device sales is always tricky, Apple analyst Katy Huberty at Morgan Stanley attempted to model Apple's iTime sales. If she's right, Apple quickly becomes the leader in this category. Huberty models between 30 million and 60 million unit sales at an average selling price of $300 per unit in the device's first 12 months.
If her model holds, Apple's revenue at the midpoint would be $13.5 billion -- and remember that Samsung's revenue from its Galaxy Gear in 2013 was $240 million, or 1/56 of Apple's projected revenue haul.
To be fair, Huberty's projections are considered very aggressive. However, when one considers Apple's brand cachet, and that Apple's smallest product line over the past 12 months grossed $2.5 billion, it would be foolish (note the lowercase "f") to think that Apple can't gross over $240 million in the first year. But if Huberty's accurate, Apple will surpass Samsung's 2013 totals in a mere week.
Final thoughts
Apple appears to have quite an event in store for participants on Tuesday. With shares hovering near all-time highs amid speculation of its new phone, a new iPad, and its first post-Steve Jobs product, this will be an interesting event indeed. Look for Apple's smartwatch market share to rocket once its iTime product is released and for continued competition between these two tech giants on multiple fronts.
