Sony (NYSE:SNE) recently unveiled two new "SmartWear" wearables -- the SmartWatch 3 and SmartBand Talk -- at IFA 2014 in Berlin.
The SmartWatch 3 notably uses Google's (NASDAQ:GOOG) (NASDAQ: GOOGL) Android Wear instead of its the proprietary UI featured in its predecessors. It has a 1.6-inch, 320x320 TFT LCD screen, 4GB of built-in memory, and a quad-core 1.2GHz processor. It also tracks activity with an accelerometer, compass, gyroscope, and GPS. The device has been priced at €230 ($297) and is expected to arrive during the fall.
The SmartBand Talk resembles a mix between a fitness tracker and a smartwatch. The Talk has a 1.4-inch e-paper display and is equipped with a microphone and speaker that allow users to make calls directly through the band. It also sports a built-in accelerometer and altimeter sensor to track walking, running, and climbing activities. The device is scheduled to launch in the fall for €160 ($207). Both devices are waterproof, offer Bluetooth, near field communication connectivity, sport heart rate monitors, and synchronize with Sony's Lifelog app for fitness and activity tracking.
Will these two wearables help Sony compete against Samsung (NASDAQOTH:SSNLF), which has flooded the market with all types of smartwatches over the past year?
How Samsung dominates the midrange market
A recent ON World survey asked 1,000 consumers the average price they would pay for a wearable device with health tracking features. Forty percent were willing to pay $99 or more for such a device, 23% were willing to pay $149 or more, and only 8% were willing to pay over $299 -- which could make things tough for Apple's (NASDAQ:AAPL) upcoming Watch, which has been priced at $350.
The $99 to $149 price range is controlled by fitness bands from Fitbit, Jawbone, and Nike, which accounted for 97% of the entire fitness tracker market in 2013, according to NPD Group. Meanwhile, the $150 to $300 price range is dominated by Samsung's smartwatches, which held 71% of the entire smartwatch market during the first quarter of 2014, according to research firm Strategy Analytics.
Samsung's cheapest device, the $150 Gear Fit (recently discounted from $200), tracks a user's smartphone notifications, daily activity, and heart rate on a curved AMOLED display. The $200 Galaxy Gear 2 Neo offers features similar to Sony's SmartWatch 3, while the recently unveiled Gear S -- which costs $300 -- boldly dumps the smartphone altogether by offering onboard 3G connectivity. Simply put, Samsung is all over the map in terms of pricing and features, making it tough for smaller competitors such as Sony, Motorola, LG, and Asus to gain ground in the midrange market.
The SmartWatch 3 doesn't offer any major advantages over the Galaxy Gear 2 Neo, but it will cost nearly $100 more if Sony doesn't lower the price for U.S. markets. The Gear Fit lacks the more expensive SmartBand Talk's microphone and speaker, but its curved AMOLED screen arguably makes it look like the pricier of the two. Lastly, Sony's Lifelog is a solid fitness tracking app, but it could easily be rendered obsolete by Google Fit, the upcoming unified dashboard for fitness apps and wearables.
Tastes and preferences are still evolving
Yet investors shouldn't blame Sony too much for the SmartWatch 3 and SmartBand Talk's shortcomings. The wearables market is evolving at a breakneck speed, and consumers are still figuring out which devices they prefer.
Motorola's Moto 360 has recently garnered a lot of attention, thanks to its sleek, round design, while Asus' ZenWatch has been praised for its leather strap and metal frame. Both devices closely resemble regular watches while offering health tracking features, and both are competitively priced against Samsung's smartwatch line -- the Moto 360 costs $250, while the ZenWatch costs €199 ($257).
If Sony wants a piece of this busy market, it needs to take bigger risks to leave a lasting impression. However, all of Sony's previous SmartWear devices -- two SmartWatches and a fitness tracking SmartBand -- were conservative efforts that brought nothing new to the table. The SmartWatch 3 and SmartBand Talk are no different.
The Foolish takeaway
Sony should be more aggressive in wearables for two reasons -- smartphones and wearables go hand in hand, and the wearables market is expected to explode over the next few years.
Sony only claimed 2.1% of the global smartphone market in 2013, according to Gartner. If the company launches a truly desirable, game-changing wearable device, it could market it alongside its Xperia smartphones and help them gain visibility against Samsung and Apple. The wearables market is expected to grow much faster than the smartphone space -- ON World predicts that global wearables shipments will surge from 4 million in 2013 to 330 million by 2018.
I believe that Sony needs to take bigger, crazier risks like Samsung to expand its market presence. Unfortunately, the company seems content to launch "me too" products that could easily be forgotten in the increasingly crowded wearables market.
Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). 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.