Naysayers On SmartWatches Are Overzealous

 |  Includes: AAPL, GOOG, SSNLF
by: Alex Cho


Negative sentiment on smart watches is not warranted.

More conclusive product developments need to take place to determine early stage success.

Investors need to stretch their imaginations on this product, because it's not going to sell itself at the present moment.

No one has seen Apple's (NASDAQ:AAPL) upcoming product category, and already people are (Rocco Pendola) of the opinion that wearable computing is gadgetry built for the sake of gadgetry. Rocco states:

Maybe I'm misreading the world's appetite for the next mobile device. But, I'm just saying, don't expect an Apple smartwatch, for example, to sell 30, 40, 50 million units like iPhone does.

A quick FYI: Apple sold 150 million units of the iPhone in its 2013 fiscal year. I'm not going to call the iWatch the next iPhone, but I'm not willing to dismiss the potential success that Samsung (OTC:SSNLF), Google (NASDAQ:GOOG), and Apple may be able to reap as a result of this untested product category.

Remember the MP3 player? All it played was music

So we fast forward to 2014, and people laugh at a device that can monitor a heartbeat. Sure, it's not much, but it at least differentiates itself enough to be its own device category. If we rewind history a little, by 14 years, I'm sure bloggers were laughing the first iPod classic off of the face of the earth. But you know, that little music player combined with iTunes generated more revenue than the Macintosh computer.

Now, if you remember, the iPod was just an improved version of the MP3 player with a better content distribution ecosystem. There are two components to a product's success: hardware, and software. The hardware of the iWatch it sounds laughable: a heartbeat sensor, that's it?

But, you haven't added the imagination of software programmers into the equation. Software developers can use that unique sensor data to create a host of applications. The hardware sounds like a perfect solution for preventing heart attacks or tapping into an emergency 911 alert. But if we stretch the imagination, a heartbeat sensor could be used to identify whether or not the person is anxious and offer information on how to lower stress levels. It could be that a heartbeat sensor can synchronize data from sleeping patterns that can indicate the person is heavily overexerting themselves. If a person's heart is beating too fast (high levels of adrenaline), perhaps touch screen sensitivity will be able to adjust to the trembling of the hands. This could go so many directions; I see no reason to criticize a product that hasn't even been revealed yet.


If you invest or write about tech, you have to let your mind capture a bit of the imagination rather than beat up on every tech or web product that goes public or is launched. Silicon Valley isn't about anecdotal experiences from the past. It's about the future, and if you can't catch the vision, you're never going to be a part of the next thing. Smart watches can grow exponentially, and in the most optimistic outcome, $15 billion in annual sales in the United States may be a reasonable outcome. Maybe I'm too optimistic, but with technology sometimes you just have to be.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.