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Samsung's 'Galaxy Gear' and the Coming Future of 'Glanceable' Tech

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The founder of MetaWatch sheds light on what might be the next must-have gadget.

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There have been rumors for months that Samsung (OTCMKTS:SSNLF) has been developing a smart watch to compete with the iWatch from Apple (NASDAQ:AAPL), another hypothetical product rumored to be under development. Last week, news circulated that the Korean tech company had filed a trademark application with the US Patent and Trademark Office for the name "Galaxy Gear," described as "wearable digital electronic devices in the form of a wristwatch, wrist band, or bangle capable of providing access to the Internet and for sending and receiving phone calls, electronic mails, and messages." The trademark application follows a series of reports that describe Samsung filing patents for flexible displays and other technologies a smart watch might use. The device will likely run on Android (NASDAQ:GOOG) and work intuitively with Samsung's Galaxy line of smartphones.
The Pebble's Caller ID Function

With seemingly more news every week about developments in the smart watch category, we decided to take a step back and assess the trend: Why is there so much anticipation for devices from Apple and Samsung when smart watches, like Sony's (NYSE:SNE) SmartWatch, the MetaWatch, and the Kickstarter-funded Pebble, already exist? How did the smart watch craze originate? Is there a deep consumer need for smart watches? Will one or two companies dominate smart watches, or will the market be more diverse?

The countdown to a new booming market is on.

By the end of 2013, the value of the wearable technology market will reach $4.6 billion, according to Visiongain, an independent business information provider. Moreover, the smartphone market is saturated. By the end of 2012, smartphone penetration in the US had approached 70%.

As Matthew Ong of personal finance and credit card comparison website NerdWallet told Minyanville, "The pace of smartphone upgrading has slowed as consumers see only incremental improvements in each new smartphone model." With less smartphone sales, mobile companies are looking for ways to expand their business into new device categories. "Smart watches are a lucrative horizon because of the potential to create a consumer need," said Ong.

Yet that is not to say that the need is completely manufactured -- at least not according to smart watch makers.

A market 40 years in the making.

The smart watch concept has been around for decades. In 1972, the Hamilton Watch Comapny introduced the very first digital watch, the Pulsar P1, with an LED display, a body of 18-karat gold, and a 25-chip circuit that used so much power that the watch could only light up for seconds at a time with the push of a button. By the late 1970s, the calculator watch had made its debut, reaching its height of influence in the mid '80s with the Casio (TYO:6952) Databank series. As digital watches developed, they gained more functionality, and in the '90s, several devices came out with even more specific applications.

In 1997, Speedo launched a smart watch with built-in monitors for measuring stroke count, distance per stroke, stroke rate, and several other metrics that competitive swimmers use. The watch was called the Strokz, and it was developed by Bill Geiser, who would go on to be the Vice President of Watch Technology at Fossil (NASDAQ:FOSL) and then strike out on his own and found the Dallas, Texas-based smart watch company MetaWatch.
A MetaWatch

In a telephone interview with Minyanville, Geiser described his early thoughts about the need for a watch that did more than tell time. He explained that around 2004, he began noticing more and more cellphone users using Blue Tooth headsets. He was intrigued by how they would stop in their tracks, reach in their pocket, and immediately check their phone when they got a call.

"The phone they would pull out then was a flip phone," he recalled. "[The flip phones] had extra displays, generally a small secondary display on the outside that was there purely for convenience. That was the overwhelming reason why all these handset manufacturers put a second display on there, because it's pretty expensive to do that. Convenience is a killer feature. In everything."

Naturally, Geiser and other smart watch entrepreneurs wondered: Why not have that secondary, convenient screen on your wrist? That way, when you feel your phone buzzing in your pocket, "a simple glance [at a smart watch] tells you everything you need to know about whether you need to deal with that notification now or later," said Geiser.

The smart watch is part of "glanceable" technology, he explained. A person wouldn't sit and read this story on a watch; that's what smart phones and tablets are for. But a smart watch would be synced with your phone and useful for checking where that call just came from, or who just emailed you, without having to take a phone out of your pocket.

It would not only be convenient; a smart watch could also save battery life for one's phone. "Your display is the biggest consumer of power on your smartphone," says Geiser.

Geiser, not surprisingly, is bullish on the smart watch sector. "Ten years from now, [MetaWatch's] belief is that there will be hundreds of companies selling smart watches, just like there are thousands of companies that sell watches today. The watch market is not a speculative market -- there are over 1.2 billion watches sold every year, so it's a big market."

MetaWatch produces two different kinds of smart watches: the Strata, which starts at $129, and the Frame, starting at $199. The watches were funded by a 2012 Kickstarter campaign, and can be purchased online.

Geiser says he doesn't think one company, like Apple or Samsung, will ever dominate the smart watch market because, as he said, "We wear this stuff, and when you wear things, it has gone from being a utilitarian product to a form of personal expression. It's fashion. You wear fashion. We're not going to all wear the same thing." The smart watch market will be diverse, with a range of price points and functionalities.

However, Geiser did concede that if Apple and Samsung entered the market (which is still speculation), they "will dominate dominate certain segments of the market."

A more natural wearable product? Another device for delivering ads?

Some tech pundits see the smart watch craze as a response to Google Glass. Nick Pirollo, a Web developer for Vistaprint (NASDAQ:VPRT) and Whims.Me, the CTO of scholarship search app Scholly, and a Google Glass developer to boot, told us, "The interesting thing about the new watch fad is that studies show the generation under 30 wear watches a lot less and [sales] are still declining in that area."

That fact makes Pirollo think that "the whole watch fad is coming about as a rebuttal to Google Glass, as even though the Glass is pretty non-intrusive, you still look pretty weird wearing it. The next most convenient place to put an 'always aware' device is the wrist."

So is it possible that the smart watch represents a baby step toward society's wider spread acceptance of more obvious wearable tech?

Others see smart watches as a bold step into the future for location-based advertising. Imagine walking past a store, say Best Buy (NYSE:BBY), and getting an instant notification on your iWatch or Galaxy Gear, notifying you of an exclusive sale. If you have five minutes to spare, you'll probably go in and check it out. Such an ad can go to your smartphone as well, but "[i]mmediate alerts of local sales will not work if people have their phones tucked away in a pocket or a purse... If they only view the ad 20 minutes later, the whole user experience is wasted," wrote Tej Rekhi in a story for Mobile Commerce Daily.

Rekhi also notes, "Without prior opt-in and the ability to specify relevant products or services, the magic appearance of an ad... can be viewed as intrusive or even creepy." Therefore, "the key to success is soliciting the user's cooperation upfront so that ads are relevant and welcome." This would not only avoid the creepiness of random ads targeted at your specific (and perhaps secret) interests, but it would also encourage positive brand associations that could "boost customer acceptance of location-based advertising while increasing the likelihood that ad recipients will convert."

The "Internet of Everything" is here.

Loren Davie, the founder and CEO of content-targeting company Axilent, thinks that "the best way to understand the smart watch momentum is to view it as the tip of the iceberg." As Davie told Minyanville in an email, "Smart watches are a subset of wearable Internet devices (which might include whatever Google Glass will eventually evolve into), which are themselves a subset of the overall trend of ubiquitous Internet-connected devices."

The so-called "Internet of Things," a term first coined by the British tech pioneer Kevin Ashton in 1999 to describe the coming interconnectivity of uniquely identifiable objects (mirrors, cars, glasses, razors, etc.), is upon us, and the smart watch is already becoming an integral and glanceable part of it.

Follow me on Twitter: @JoshWolonick and @Minyanville
No positions in stocks mentioned.
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