An Apple Smart Watch? Time Will Tell

Last week, The Wall Street Journal, The New York Times, and Bloomberg News all reported that unnamed sources have said Apple is developing a smart watch. These reports confirm that Apple wants to move beyond the iPad and iPhone, and is seeking a new challenge that will bring technology closer to the consumer in the form of a wearable wristwatch computing device.

Developing consumer electronic products that are in demand is but one aspect of a thoroughly sound supply chain. In this case, introducing smartphone functions into a watch-like device will prompt Apple's engineers to think hard about what functions and user-friendly capabilities they can pack into a small device that is pervasive in our lives.

The Wall Street Journal article notes that while it is "unclear" what technological capabilities Apple will be developing for its smart watch, the company has discussed the device with Hon Hai Precision Industry Co., Ltd., its manufacturing partner. As Apple works to incorporate a curved glass design, according to the NYT story, the company will want to differentiate its product from the many smart watches and other wearable devices made for the wrist.

Big design effort
All three articles describe Apple as a company well on its way to introducing a smart watch soon, with the Bloomberg story announcing that Apple has already assembled a team of about 100 product designers to work on an Apple watch that will perform some of the functions already handled by the iPhone and iPad.

Timing is everything: A battle is brewing between Apple and Samsung for
the smart-watch market. What it means for the supply chain is as yet unclear.

To be sure, there are many prototypes, as well as products, on the market that Apple can screen as it seeks to differentiate its product from the pack. A smart watch from Pebble Technology Corp., for example, connects to iPhone and Android devices using Bluetooth, and alerts users to incoming calls, emails, and messages. At the Consumer Electronics Show this year, Toshiba Corp. unveiled a smart watch that uses an ECG sensor to measure the pulse in your wrist, but the company could not say when the product will come to market.

Other devices don't tell the time, but are wristbands with computing capabilities that collect and send health and fitness data. The Nike + FuelBand boasts a sports-tested accelerometer to track your daily activity, including walking, running, dancing, and other activities. The wristband tracks each step taken and calorie burned.

Market potential?
Certainly, the wearable technology market provides untold opportunities for Apple. IMS Research estimates that 14 million wearable devices were shipped in 2011, and that number is forecast to jump to 170 million wearable devices to be shipped in 2016. Also in 2016, the wearable technology market will be worth $6 billion, up from $2 billion in 2011.

Sales of wearable devices are being driven by the demand for actionable, real-time data, Theo Ahadome, senior analyst at IMS Research, concludes. He also told me that these news reports confirm what IMS Research has forecast -- that wearable computing will be the new paradigm shift in information communication technology, bringing technology even closer to the user, and increasing interactions that consumers have with these devices.

According to Ahadome:

Our forecast is that a major supplier such as Apple or Samsung will produce a smart watch by 2015.

Not to be outdone, screenshots of a Samsung smart watch appeared last week, a sign that an upcoming battle is brewing between Apple and Samsung in this market. If both companies introduce wristwatch devices around the same time, Ahadome expects they will tune their supply chains to focus on the usefulness of the product, battery life, and price, which will be critical to consumer demand. According to Ahadome:

A reasonable price point is $200. The usefulness of the device is when it starts doing something that your smartphone cannot do. If it is only connecting to the phone and becomes a display then it's not as useful since users can simply take their phones out of their pocket! If it is integrating sensors for fitness or providing near field communications and mobile payments then it starts to be more useful, but more expensive at the same time. A useful way to phrase it is – if you leave your phone at home, is your smart watch still able to perform useful functions?

So the questions become:

• What will make an Apple smart watch tick?
• Should we expect to receive email notifications, text messages, and reports about the weather?
• Will there be health-monitoring features on this device?
• How much will it cost?
• And what will it take for you to be convinced that buying an Apple smart watch is a good investment?

Let me know what you think.

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