First-to-market means diddly when it comes to smartwatches

Samsung's early entry with Galaxy Gear could be a proving ground for Apples iWatch premiere in 2015, analysts say

The old wisdom that "first-to-market" technology products will win out gets thrown out the window when it comes to smartwatches and some other wearables.

Samsung launched its first Galaxy Gear smartwatch for $300 last September and followed up with the Gear Fit and two new Gear smartwatches in February.

Carriers are selling Samsung's Note 3 phablet and Galaxy Gear smartwatch as a package. (Photo: Samsung)

Even though electronics giant Samsung dominates smartphone sales globally, and is an early entrant in the smartwatch market, that's no guarantee it can build the pizazz and customer loyalty for smartwatches that might accompany Apple's inevitable entry into the category.

Another tech monolith, Google, unveiled the Android Wear wearables platform in March. Even so, many analysts now agree Apple won't unveil its rumored iWatch until 2015, shipping it perhaps a full two years after the first Galaxy Gear.

Android Wear will run on at least two smartwatches, the Moto 360 smartwatch from Motorola and the G Watch from LG Electronics, which are scheduled to go on sale this summer.

"As both Google and Apple will likely be [smartwatch] players in 2015, this could negate Samsung's [early to market] advantage," said Patrick Moorhead, an analyst at Moor Insights & Strategy.

While an early entrant, Samsung wasn't first-to-market with smartwatches. A number of mostly smaller vendors have sold smartwatches with some limited functionality for several years. Sony, with its huge portfolio of electronics products, announced its first SmartWatch in April 2012, then followed with the $200 SmartWatch 2 last October. It also announced its SmartBand wristband for $130 in February to work with its Lifelog fitness app.

Sony's smartwatches and the Samsung Galaxy Gear haven't been a solid hit with the market despite their early entrances and despite the sizeable marketing capabilities of both companies.

"First-to-market only matters if you have a killer product or you are trying to define a category," said Carolina Milanesi, an analyst at Kantar WorldPanel. "Galaxy Gear was [one of the] first to market, but it did not make a difference in terms of sales."

What could matter, she said, is if a manufacturer like Samsung introduces a wider range of related products, such as the Gear Fit wristband that can be used to measure pulse rate and other biometrics. "Our data shows that vendor loyalty increases by 20 percentage points for users that buy multiple devices, such as a phone or tablet, so having different tech categories certainly helps a manufacturer," she said.

IDC recently said Samsung came out on top in an online ConsumerScape 360 survey of more than 50,000 consumers in 26 countries when asked to name their most trusted brand for wearables. Samsung beat out Apple, Sony and Google in that category.

But that finding could easily change with Apple's iWatch -- assuming that's the actual name -- given Apple's success with the iPhone, which was introduced in 2007 and quickly displaced previous cellular handsets, including a number of BlackBerry models. The iPad had a similar effect when introduced in 2010, even though tablets with digital pen input had been on the market for years.

"There's clearly a first mover advantage" for technology products, said IDC analyst Ramon Llamas. "But if your strategy is to seek out and grab as much market share as you can because the education on a new product category has taken place, that's what I expect Apple to do. Apple is prone is stand on the shoulders of what's come before."

Llamas is one of several analysts who believe Apple will wait for the smartwatch category to slowly grow before jumping in. He believes Apple will be busy launching a larger iPhone and a different sized iPad in 2014, so to inject a new smartwatch device category would be too many devices for one year.

"Apple is comfy to sit back and let the competition suffer all the slings and arrows," Llamas said. "Look at all the criticism that greeted the Galaxy Gear," including a $300 initial cost that quickly dropped to nearly half and the need to pair it with a limited number of Samsung Galaxy smartphones and tablets.

On another front, Apple took a wait-and-see approach to Near Field Communication, now widely available in Android phones, and may never adopt the NFC approach for the iPhone in lieu of its iBeacon capability.

Motorola announced the Moto 360 smartwatch that will run on Android Wear. (Photo: Motorola)

Early-to-market probably won't even matter at all with smartwatches and related wearables. The average consumer is finding prices too high and the number of apps too limited. While the Moto 360 has won high marks for its round face and overall styling, nearly all the other rectangular models have been panned for being too large or plain ugly. That's where the sleeker, more stylish fitness bands have stepped in. Also, most smartwatches rely on a Bluetooth connection to a smartphone to access the Internet and more powerful functions -- an unproven concept for many consumers.

"Apple only releases products when it thinks its technology and its market are ready for them," said Jack Gold, an analyst at J. Gold Associates. "The smartwatch market is still nascent, and waiting until 2015 won't have any detrimental effect. It's more important to Apple to do it right than to do it soon."

There comes a time when being late to market matters, but analysts don't feel the smartwatch category has reached that stage -- not even close. The only thing that might matter is if a manufacturer waits too long and loses the interest of app developers who will have been building apps for a competing smartwatch platform, Moorhead said.

"Being first is not always a guarantee for ultimate success," Milanesi said. "Look at Motorola being first with 3G or Nokia being first on smartphones with Symbian or BlackBerry being first with marrying email and phone. The list goes on and on."

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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