Apple (NASDAQ:AAPL) will finally launch its eagerly anticipated Apple Watch next month. The new smartwatch marks a major test for Apple, which seeks to diversify its top line beyond iPhones, but it's also expected to turn smartwatches from niche devices into mainstream ones.
That's a catalyst the market desperately needs, since only 720,000 Android Wear devices were shipped worldwide in 2014, compared to 4.6 million smart band shipments, according to Canalys. That's bad news for Google (NASDAQ:GOOG) (NASDAQ:GOOGL), which tried to control the smartwatch market with the same free OS strategy which it used to dominate the smartphone one. The most common complaints regarding Android Wear devices are weak battery life, clumsy software, and unappealing designs.
However, Huawei and LG recently unveiled two new Android Wear devices -- the Huawei Watch and LG Watch Urbane -- at Mobile World Congress in Barcelona. Both devices feature round metal frames which bear a strong resemblance to Motorola's Moto 360, one of the top selling Android Wear devices. Will these two new smartwatches steal the spotlight from Apple Watch, or will they merely be forgotten alongside earlier Android Wear efforts?
The hardware's not that impressive
The Huawei Watch has a 1.4" AMOLED display, compared to the LG Watch Urbane's 1.3" P-OLED display. Huawei's device has a heart rate monitor, 4GB of storage, 512MB of RAM, and is powered by a Qualcomm 1.2GHz processor. LG's device also has a heart rate sensor, 4GB of storage, 512MB of RAM, and is powered by a Snapdragon 400 1.2 Ghz processor. Superior screens aside, the guts of both devices are fairly comparable to the Moto 360's.
The Huawei Watch has a 300 mAh battery, which is also comparable to the Moto 360's 300 mAh one. That's troubling, since the Moto 360 only lasted for about a day on a single charge. LG's Watch Urbane is equipped with a 410 mAh battery, which the company claims can last for 30 hours on "normal" use.
Focusing on luxury appeal
Early Android Wear devices, like LG's G Watch, were often criticized as being boxy and ugly. That's why newer devices like the Moto 360 and Asus' ZenWatch are designed to look more like analog watches. The Huawei Watch and LG's Watch Urbane represent a continuation of that aesthetic.
But as companies focus more on aesthetics and boosting luxury appeal, prices start rising. Hewlett-Packard's MB Chronowing, which ditches most power-hungry smartwatch features for simple notifications and a 7-day battery life, still costs $350. Swiss watchmakers are also developing analog watches -- starting at around $1,000 -- which lack digital displays but pair with companion apps like fitness trackers. The Huawei Watch and Watch Urbane haven't been officially priced yet, but both devices will likely cost more than the Moto 360, which initially launched for $250.
Apple is taking aim at that same high-end market with the Apple Watch, which will have a base price of $349. However, premium versions and expensive watch bands could substantially inflate the price per unit.
Why Huawei and LG won't steal Apple Watch's thunder
Companies like Huawei and LG are mimicking Apple's strategy in hopes of tapping into an untested "luxury market" for smartwatches. Unfortunately, Huawei and LG are overlooking three important facts.
First, Huawei and LG lack Apple's brand recognition and appeal as a "status symbol" brand. Huawei and LG's watches might interest gadget enthusiasts who frequently read tech blogs, but they're likely to slip under the radar of average consumers. But when Apple Watch arrives, it's likely to catch the attention of mainstream consumers.
Second, most consumers already think that smartwatches are pricey. Last year, research firm ON World reported that 40% of surveyed consumers would spend over $99 on a smartwatch with health-tracking features, but only 8% were willing to spend over $299. Meanwhile, comScore found that the median U.S. iPhone user earns 40% more annually than the median Android user. Therefore, iPhone owners with more spending power might be more inclined to buy an Apple Watch, while average Android owners might not feel the same way about comparably priced Android Wear devices.
Lastly, Apple has established a much stronger ecosystem to support the Apple Watch. HealthKit can sync biometric data to electronic health records (EHR), while Apple Pay can be used at a growing number of retailers. Google Fit doesn't offer the EHR integration found in HealthKit, and Google's mobile payments initiative is still fractured between Google Wallet, Android Pay, and Softcard.
Wall Street analysts expect Apple to sell between 10 million and 60 million smartwatches within the first year. This means that even the most conservative analysts think Apple can sell nearly 14 times as many watches in 2015-2016 as Google's Android Wear partners did in 2014.
Faced with those odds, it could be tough for individual Android Wear manufacturers to justify investing in the development of smartwatches when the market opportunity remains so small. However, if Apple Watch is a bona fide hit and boosts the visibility and acceptance of smartwatches, more Android device owners might consider buying Android Wear devices, which would benefit early entrants like Motorola, Huawei, and LG.