Smartwatches arrive before their time

Intel's approach cuts smartwatch dependency on smartphones

LAS VEGAS -- Smartwatches and other wearable computing devices are getting plenty of buzz at International CES this year, but it remains to be seen if, and when, the gadgets will achieve broader consumer interest.

The Pebble Steel smartwatch will sell for $249. (Photo: Pebble)

Some economists believe the wearables category, which includes health and fitness products that connect with a smart wrist band, is set to explode. Meanwhile, companies such as AT&T believe that smartwatches -- as a subset of all wearables --are promising products that are yet to be proven.

"Smartwatches are interesting," said David Christopher, AT&T's chief marketing officer, in an interview. "The market is early, and we're going to watch and see. It's early for these things, but there's lot of potential."

What seems to be missing from smartwatches is a "killer app," said Shawn DuBravac, chief economist for the Consumer Electronics Association. in an interview. In a presentation to reporters, DuBravac said that 75 to 100 wearable devices would be shown at CES, which is run by the CEA, and predicted that "wearables will explode" in the coming year.

Smartwatches so far are challenged by a limited number of apps, a general lack of style and high prices. Some devices are selling for $200 to $300 -- more than the cost of a tablet computer. Women have complained that the current array of smartwatches are too large and seem designed primarily for men.

A startup called Pebble, launched the Pebble smartwatch after a successful Kickstarter investor campaign last year, selling the device for $150. On Monday, Pebble announced a second-generation device called Pebble Steel that sells for $249 and raises the fashion sense of the earlier version, offering designs in brushed stainless steel and a black matte version. Pebble also said it will have an apps store to purchase smartwatch apps.

Intel CEO Brian Krzanich in an opening night keynote introduced a few wearable device concepts, including a smartwatch that doesn't need to be paired with a smartphone. The device includes geo fencing technology that can send alerts when the wearer goes outside the geo fence. He also announced Edison, a full Pentium-class PC that's the size of an SD card and runs the Linux OS, and includes Wi-Fi, Bluetooth 4.0 and and an app store.

Focused on the fitness and health monitoring category, Sony on Monday announced the Sony Core, while LG announced the Lifeband Touch.

"It's interesting that we are starting to see two trends -- one about watches that offer notifications and convenience like the Pebble and Samsung Galaxy Gear and Qualcomm Toq, but then others like Sony Core that are about collecting data from you and what you do," said Carolina Milanesi, an analyst at Kantar.

Patrick Moorhead, an analyst at Moor Insights & Strategy, said Intel's smartwatch is interesting because it can be autonomous, but it will be a challenge to market because consumers will probably need to buy a second phone number and data service plan for the watch in addition to a smartphone.

If Intel's smartwatch prototype can catch on, it would provide differentiation in an early market, and "that truly does change the game," Moorhead said.

Having a smartwatch that can run independently of the smartphone could make smartwatches appealing to more consumers "and not just the techies show like gadgets," said Jack Gold, an analyst at J. Gold Associates. "Most of the current crop of smartwatch devices are really just experiments to see what the market will buy."

Kunimasa Suzuki, president and CEO of Sony Mobile Communications, holds a Sony Core fitness tracker during a presentation at the International CES show in in Las Vegas on Monday. The wearable device will be able to record data about the user's activities and movement and display the information in a LifeLog app. (Photo: Steve Marcus/Reuters)

A smartwatch that operates independently of a smartphone is a wise direction for manufacturers, Milanesi said. "Being a notification hub will not be enough to win in this space."

AT&T sells both the first-generation Pebble and the $300 Galaxy Gear smartwatch from Samsung, which must be paired via Bluetooth to certain Galaxy devices. It has a camera, microphone and speaker and about one-half a gigabyte of storage to hold photos that are synced to the phone. Phone calls can be taken on the Gear watch but only in a speaker mode with the phone establishing the cellular connection. That means truly private voice conversations are almost impossible.

Moorhead had expected Samsung to announce an updated version of the Galaxy Gear at CES, but said Samsung will probably wait until late February at Mobile World Congress in Barcelona, when Samsung is expected to launch the Galaxy S 5 smartphone.

Reports indicate that 800,000 Galaxy Gear smartwatches have sold since the device launched three months ago, but Moorhead said there is still a lot of Gear inventory waiting to be sold. "It's a bit of a disappointment that Samsung didn't announce their new watch, but with all that inventory sitting on the shelf, I don't think they are motivated to bring out something new," he said.

Some analysts are taking a wait-and-see approach to smartwatches, and said that CES will include some smaller vendors at a "Wrist Revolution" area on the show floor, which officially opens Tuesday.

Research firms Canalys and Gartner have put the number of smartwatches that will ship in 2014 at 5 million and up to 7 million, respectively, up from 500,000 that Canalys said shipped in 2013. That growth rate is phenomenal for an early-market technology, but is just a tiny fraction of the 1.3 billion smartphones that analysts believe will ship in 2014.

The likelihood that Google and Apple, and possibly Microsoft, will introduce smartwatches in 2014, might account for the ambitious growth projections.

To put things in perspective, CEA's economist DuBravac noted that there might be 20,000 new products, including smartwatches, announced this week at CES, but not all will appear on physical or virtual store shelves later this year.

"Products come in two types at CES: Those that are feasible and those that are commercially viable," he said. "A lot of what you see is intended to show what's possible, perhaps in five to 10 years."

He added: "Early on, smartwatches need to connect to smartphones, but maybe someday smartwatches will even replace smartphones."

This article, Smartwatches arrive before their time , was originally published at Computerworld.com.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

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