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Will Smart Watches Boom or Bust in 2014?
Will Smart Watches Boom or Bust in 2014?

By Jennifer LeClaire
November 4, 2013 1:38PM

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"Smart watches will be the most important new product category in consumer electronics since the iPad defined the market for tablets," said Chris Jones of Canalys. "Software platforms tied to smart watches will also be a tremendous opportunity for developers to write apps in categories such as health and wellness or sports and fitness."
 



Smart watches are all the rage. Well, at least the notion of smart watches is. But are smart watches really worth the money? Will they rank high on wish lists for this holiday season? Will the segment all-out explode in 2014?

Some industry analysts are indeed predicting a smart-watch boom, especially with Apple expected to enter the market in 2014. Canalys estimates the smart-watch market will exceed 5 million shipments in 2014.

It's been a slow and steady climb for the wearable technology. Canalys estimates that 333,000 smart watches were shipped in 2012, with Sony and Motorola leading the charge. In 2013, the firm forecasts more than 500,000 smart watches will ship before the market grows exponentially in 2014, with 5 million shipments as Apple, Google, and Microsoft join the fray.

Opportunities and Challenges

"Smart watches will be the most important new product category in consumer electronics since the iPad defined the market for tablets," said Chris Jones, Canalys vice president and principal analyst. "Software platforms tied to smart watches will also be a tremendous opportunity for developers to write apps in categories such as health and wellness or sports and fitness."

Canalys said hardware design will be critical for smart watches, as consumers will only want to wear fashionable products. The firm predicted market for traditional watches will quickly be disrupted once consumers determine that smart watches add sufficiently valuable functionality to their lives while being "stylish enough." Canalys estimates that more than a billion watches were shipped in 2012.

Despite the predicted success, though, Canalys said device vendors will face a number of tough challenges.

"Strict power constraints will prohibit cellular technology, limit the number of sensors and necessitate communication with smart phones over Bluetooth Low Energy," said Canalys analyst Daniel Matte. "ARM architecture licensees that design custom silicon will enjoy significant hardware advantages in this space."

Smart watches will also require custom software.

"An effective smart watch won't just be a second screen for a smart phone. Creating a competent developer platform specifically for the form factor will be an enormous challenge," said Canalys analyst James Wang. "Google and Microsoft must execute more successfully than they have done with their tablet platforms and will have to adapt their business models appropriately."

Just Plain Bad Technology?

We asked Roger Entner, principal analyst at Recon Analytics, for his thoughts on the smart-watch market. He's been skeptical from the beginning.

"What does the smart watch really do that you can't do with your phone right now? If the only thing that changes is that I hold my watch to my ear instead of my phone to my ear, it's not going to sell," Entner told us. "We have here in Dedham the Museum of Bad Art. Maybe we should have a Museum of Bad Technology."

All quipping aside, Entner said the key issue with smart watches is the power envelope. How much power do you put in a smart watch? How big, then, does the battery have to be? How does that affect the screen and how heavy is the watch by the time it's decked out?

"If you make a smart watch light, it automatically doesn't have a lot of power and therefore your screen size is limited. I think wearable technology requires a voice-driven feature, you can't depend on a screen," Entner said. "The only exception might be glasses. But then again how much weight to do you want to carry on the back of your nose? Not a lot. If the glasses slides off your nose it shouldn't break your toe."
 

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