Last year, Microsoft (NASDAQ:MSFT) launched Microsoft Band, its first wearable. With a retail price of $199, the Band was fairly expensive for a fitness tracker, making it a difficult sell. But in recent weeks, several merchants have offered heavy discounts.
Microsoft will hold a hardware-focused press event on October 6th. The debut of a second generation Band seems likely. Given Microsoft's recent focus on cross-platform compatibility, the Band 2 could provide tough competition for smartwatches and FitBit's (NYSE:FIT) trackers.
The Microsoft Band falls short
The first-generation Band was widely panned by critics, and failed to catch on with consumers. Reviewers lampooned its uncomfortable, unattractive design, poor battery life, and unfortunate handling of notifications. It sports a wide variety of sensors, but its rectangular, flat display makes for a difficult fit, and at $199, it straddles an odd space between fitness tracker and smartwatch.
Last month, IDC released its inaugural report on the wearables market. FitBit and Apple led the pack, shipping 4.4 million and 3.6 million units, respectively. Samsung came in at number five, shipping around 600,000 units, and was followed by Jawbone and Huawei. Microsoft was not among the top seven vendors.
In July, Target lowered the price of the Microsoft Band to $150. Last week, Best Buy was even more aggressive, cutting the Microsoft Band's price in half. At $99, it offers far greater value, but these moves appear aimed more at clearing inventory than at boosting its popularity.
A more attractive design
Reports suggest that Microsoft plans to unveil the Microsoft Band 2 at its October event. Given its age, and the recent price cuts, a successor wouldn't be surprising.
According to Windows Central, the Microsoft Band 2 will significantly improve on its predecessor's design, with a more attractive, curved display. That should provide for a more comfortable fit, and a less conspicuous wearable. It should also offer improved sensors.
The Microsoft Band is platform agnostic -- it works with Windows Phone, iOS, and Android. But it offers the greatest functionality when paired with a handset running Windows Phone. The Microsoft Band supports voice search and the software giant's digital personal assistant, Cortana, but not when it's used with an iPhone or Android device. This is a particularly glaring limitation, given Windows Phone's minuscule market share.
Microsoft has already brought Cortana to Android, and plans to launch an iOS app in the near future. If Microsoft can offer Cortana to all Band users, it could make the Band's successor a much more compelling product. It could also benefit Microsoft's online ecosystem by encouraging users to rely on Cortana, and, by extension, its Bing search engine. Microsoft may have lost the smartphone market, but through a wearable, it could still tie iOS and Android users to its software.
Competition continues to intensify
If it receives a more favorable reception than its predecessor, the second Band could be FitBit's greatest competition this fall. With its cross-platform compatibility and fitness-focused functionality, the Microsoft Band is much more of a FitBit competitor than a high-end smartwatch like the Apple Watch or Samsung's upcoming Gear S2.
Microsoft is expected to unveil other devices at its October event, including the Surface Pro 4 and new Windows smartphones. It could even unveil a redesigned Xbox One console. But the second-generation Microsoft Band could be Microsoft's most intriguing product, as the market for wearables remains in its infancy.
Sam Mattera has no position in any stocks mentioned. The Motley Fool owns and recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Microsoft. 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.