After looking over Google's (NASDAQ:GOOG) developer documentation, I came away very impressed with Android Wear. It's an ingenious approach to wearables that leverages the Android OS devices Google assumes that people already have. As such, an Android Wear device derives most of its functionality from the Android phone or tablet.
Although this should be taken as a very loose analogy, an Android Wear smartwatch is to the Android OS device what Chromebook is to Google's cloud services. A Chromebook has some standalone capability, but derives most of its functionality from the cloud. Similarly, an Android Wear device derives most of its functionality from the Android device it is paired with via Bluetooth.
Just as the Chrome OS approach allowed Chromebooks to be low cost, light weight laptops, Google's Android Wear approach should allow lower cost Android Wear devices by reducing processing and memory requirements, and battery capacity.
As a Forbes article recently related, Chromebooks constituted 21% of commercial notebook sales in 2013 (through November), so the Chromebook approach has demonstrated that it can be a compelling value proposition.
How it Works
Google has released an Android Wear developer preview to developers. Does this mean that Android developers are busily porting apps to the Android Wear smartwatch platform? Not exactly. The developer preview mostly consists of a set of new APIs to be added to the existing Android OS platform so that developers can support Android Wear functionality.
After apparently giving it a lot of thought, Google has decided that the killer app for smart watches is to be a convenient user interface for the Android smart phone or tablet. The communication between the Android Wear watch is two-way. Android Wear watches receive notifications from the Android device automatically, and provide a way to respond to them with either gesture-based or voice commands. Android Wear watches can also initiate actions to be performed by apps in the user's phone.
If a developer sets up an app notification in Android, it will be automatically relayed to the Android Wear device, and the developer doesn't have to do anything extra to the app's code. For the developer preview, the developer's actual test device has to have an Android Wear App installed, but probably future Android implementations will have this functionality built-in.
If the developer wants to add the ability for the Android Wear user to respond to the notification with voice or gesture commands, these are also just mods to the Android OS app. So far, the developer never touches the Android Wear operating system (AWOS). In the developer preview, the Android Wear device is emulated by the developer's host PC.
The operating system in the Android Wear device takes care of formatting the various app messages into convenient cards that can be swiped vertically and horizontally. The AWOS manages data communication with the Android OS device and formats the notifications into cards, as well as transmits back to the device user commands. It appears that the Android Wear watch simply relays voice commands to the phone for voice recognition.
The benefits to the Android ecosystem of the Android Wear approach are huge. The Android Wear watch works from the very start displaying useful notifications from the Android device, without developers having to lift a finger. And developers who spend a little time will in effect be able to deploy "mini-apps" to the Android Wear device by making very modest alterations to their already existing code. The approach Google is taking gives Android Wear devices a ready-made app ecosystem.
Because most of the computational heavy lifting is still done back at the Android phone or tablet (or cloud), the processing requirements for the Android Wear device can be kept very modest. This lowers battery power requirements, enabling a lower cost and more compact device. Judging by the Moto 360, Motorola's Android Wear smartwatch announced on 3/19, the first Android Wear devices will still be pretty bulky, but this will probably get better over time. And Motorola hasn't announced what the battery life will be.
The Moto 360 also demonstrates that Android Wear watches will have some stand-alone capability, such as a simple watch face display when there are no notifications, or the watch isn't paired with an Android device. Additional functionality may be incorporated into the device by the time of its release this summer. The Moto X also appears to use an AMOLED screen, and probably other Android Wear device manufacturers will follow suit.
Google is applying the basic marketing approach of Android OS to Android wear of distributing Android Wear to numerous industry partners who will then make a variety of Android Wear devices. Android Wear's industry partners read like a who's who of the device electronics world: Asus, Intel, Motorola, Broadcom, LG, Qualcomm, Mediatek, Samsung, HTC, and MIPS. Joining this illustrious group will be Fossil Group, which, according to Federation of the Swiss Watch Industry statistics, held 5.2% of the worldwide market of 1.2 billion watches in 2013.
Consumers will be quickly presented with a variety of form factors and price points for Android Wear smartwatches, but also a consistent and easy to use user interface. Consumer choice has always been a major strength of the Android ecosystem, and Google clearly intends to exploit this once again for Android Wear. The combination of commodity OS with multiple device partners propelled Android into the number one mobile operating system by market share and number of users, and Google clearly hopes the same thing will happen with Android Wear.
One question that hasn't been quite answered is how Google will monetize Android Wear. Android Wear certainly has the potential to display advertising of various forms and be context and situationally aware. For instance, shoppers could receive notification of sales items while in a store.
Beyond advertising, will Google charge for the Android Wear OS that will be installed in the smart watches? Google has said nothing about making Android Wear open source, and I doubt it will be. It may be that Android Wear will never be available for app development by Google's community of Android developers, and that only manufacturers will be able to pre-install apps.
I had just finished my recent article on the Apple (NASDAQ:AAPL) iWatch when the Android Wear announcement was made. While iWatch continues to be merely an object of speculation, Android Wear has instantly materialized as very real. Yes it certainly seems that Apple has been out-maneuvered on this one. By narrowing the functionality somewhat of the Android Wear smartwatch, Google has been able to bring it to market ahead of Apple, assuming that Apple won't come out with the iWatch before the Fall.
I actually consider that the device concept I presented for iWatch would be more useful overall. "Feature watches" such as sport watches with GPS or heart rate monitoring already pack a lot of functionality into a watch. Although some readers took issue with my comparison of the iWatch with the iPod Nano, the Nano also packs a lot of functionality into a very small (even wearable) device. Google, lacking experience with creating really small wearable devices such as the Nano, chose to set their sights on creating a phone interface device rather than a stand-alone wearable device with phone interface capability.
Which paradigm will win in the market place? I suspect that they'll coexist in the market in much the same way that iOS and Android coexist now, but it's a little early to speculate about relative market share.
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.