Samsung's (OTC:SSNLF) revolutionary Galaxy Gear Watch was released on September 25th, 2013. Many Apple (NASDAQ:AAPL) investors became concerned that Samsung could quickly grab a large chunk of the "Smart Watch Market" before Apple could release their iWatch, which many foresaw as the next big market for Apple to enter. However, so far Galaxy Gear has been quite a big disappointment. With an embarrassingly high 30% return rate over the holidays, and a 2.5 out of 5 rating on CNET, it's clear Samsung's Galaxy Gear isn't the next revolutionary gadget we had hoped for. Despite that, Apple has continued to hire and make plans for the imminent release of their iWatch, leading to the question: Is there still potential for the smart watch?
The Galaxy Gear
Most users of Galaxy Gear loved the brushed metal look and the comfort of the band. However, there are some flaws, including the seemingly random camera, located on the top of the band. Looking under the hood reveals a very powerful 800 Mhz CPU with 0.5Gb of RAM, and 4GB of memory; these specs would equate to around 50%-70% of an average new smartphone's processing power.
So far, anyone who has tried the Galaxy Gear either hates it, or thinks it has a huge potential but that it's just not quite there yet. What it boils down to is the device's usefulness, which revolves around the separate app store platform and lack of unique features. The Galaxy Gear is essentially a less powerful phone, with very limited apps, that you wear on your arm. It has no special features and gadgets that would make it different from every other device with a touch screen out there. From CNET's Editor: "Samsung's take on the smartwatch has some potential, and it does get some things right, but its inability to perform truly "smart" functions means it falls far short of expectations." (CNET, above) This was Samsung's biggest mistake concerning the Galaxy Gear, and it doesn't look like a quick fix.
The main problem with Samsung's smart watch that adds insult to injury over the lack of unique features, was its app store. Samsung decided to create a separate app store platform solely for the Galaxy Gear, rather than integrating it into Google's Play Store. Unfortunately, this resulted in CNET observing, "A lack of email and social network support, limited compatibility with other devices, the external charging case, and hit-and-miss voice control seriously limit its usefulness.". Another user noted, "there are barely any apps available, and even fewer that are worth downloading."(CNET, above) Simply put, there aren't a whole lot of features to keep you excited about and very few apps worth downloading.
- Smart Watch Concept
- Usefulness / Features and Apps
"I think the wrist is interesting. I'm wearing this (Nike Fuelband) on my wrist...it's somewhat natural. But as I said before, I think for something to work here, you first have to convince people it's so incredible that they want to wear it."
- Apple CEO Tim Cook at D11 Conference: May 28, 2013 (Chaione)
Mr. Cook makes it very clear that Apple's focus is to produce an iWatch with a very distinguished use and a wearable piece of technology. This brings us to November of 2013, with Apple's hiring some new experts:
-Former Vice President of research and development for biosensor technology and algorithms for remote physiological monitoring with application towards wearable medical devices. (LinkedIn)
-Formerly at Sano Intelligence, Nancy's work focused on a device that measures blood chemistry through microneedles. (LinkedIn 2)
-Former Chief Technology Officer of Cercacor, she designed sensor based medical technologies, including: measuring hemoglobin, oxygen saturation, and pulse rate. (LinkedIn 3)
-Former Chief Medical Officer and Executive Vice President of medical affairs at Masimo Corporation, which specializes in pulse oximetry (measurement of oxygen saturation in the blood). (LinkedIn 4)
Roy J.E.M Raymann
-Lead several sleep-related research products, that studied sleep and activity monitoring. (LinkedIn 5)
All five of these specialists have one thing in common: They have the skills to develop wearable health monitoring devices. There have also been numerous rumors regarding Apple's development of a new app called the "Health Book" (AppleInsider), which would be a part of the iOS 8. It could be reasonably inferred that iOS 8 and the iWatch would be a team effort. Apple has indicated that their main goals with iOS 8 are to add health-related monitoring and features to their framework. However, that can only go so far running on a device that is kept in a person's pocket all day. This is where the iWatch comes in. The iWatch would be in contact with a person's skin all day allowing it to become the perfect wearable monitoring device.
The New Frontier
As mentioned before, the main fault with Samsung's Galaxy Gear was that it offers nothing unique that was expected of a smartwatch. The hardware was there, but the functionality of the device was sorely lacking. However, with the iWatch, Apple has the opportunity not just to create a smart watch that can run Apps from the App Store, but a smart watch that can also monitor your health. If Apple sticks with its current "App Store" platform it would solve the problem that Samsung has run into, which is that it offers virtually no "Useful Apps".
Samsung has proven that simply gluing two bands of plastic onto a small phone and strapping it onto your wrist is not what the customer wants. However, Apple CEO, Tim Cook, recognizes this and has hinted at many of the new features the iWatch will have. The iWatch will not be just another wearable device. With the support of Apple's massive and loyal customer base, the iWatch offers the potential to expand Apple's product offerings into new markets and reignite their floundering growth. Samsung just put a watch with the hardware of a smartphone on the wrist, Apple intends to use the wrist as the next frontier for the smartphone.
The iWatch is stated to be released in late 2014. (TechRadar)
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.