Samsung (005930.KS) took the wraps off its new galaxy Gear smartwatch on Wednesday. And despite numerous leaks, the final product was somewhat slimmer, sleeker and cooler than anticipated.
The $299 Galaxy Gear comes in six sexy colors, runs dozens of specialized apps, provides a peek at email and text messages, has a built-in camera, responds to voice commands and even acts as a phone receiver for your cell phone or phablet.
So does Samsung have a possible huge hit? Not very likely.
That’s because, toward the end of a lengthy introductory demonstration, Samsung executives revealed the watch is only compatible with recent Samsung Galaxy smartphones and tablets. Other Google (GOOG) Android devices need not apply. And Apple (AAPL) iPhone users? Forget about it.
A narrow market
That dramatically narrows the market for what might otherwise be a cool new gizmo. A recent Sony (SNE) smartwatch works with any Android phone running at least version 4.0. And Apple is expected to launch its own smartwatch sooner rather than later.
Another possible limiting factor on sales? The Gear watch seems to duplicate many features of current smartphones with a much smaller screen – just 1.6 inches versus smartphones with 4-inch to 5-inch displays.
And people obviously have little hesitation pulling out their phone in almost any circumstance to make a call, check email or play yet another round of Candy Crush Saga.
The Gear watch, thus, seems best suited for the even smaller niche of Samsung customers who own a so-called phablet. Those are larger, phone-like devices with screens of 5.5 inches or more, such as the Galaxy Note 3, which Samsung unveiled at the same event on Wednesday. People are more reticent about looking foolish holding up one of the large phablets to their ear to make a call. And some are too big to be stashed in a pocket. So the Gear watch makes a savvy complement.
The watch can't do much without a Bluetooth wireless connection to a device with Internet access, of course. It does have a built in pedometer and the camera has some local storage.
Samsung’s final self-imposed disadvantage is the app store. Instead of publishing or licensing specifications to let app makers create compatible apps, Samsung is limiting the watch to a private, Samsung-run app store.
Splintering off from the popular Google Play app store has proven to be a tough strategy outside of Asia, where language barriers encourage shopping at third-party stores.
The Samsung tactics are clearly intended to strengthen the company’s own ecosystem around its mobile devices. The company’s devices run Android software, and Samsung doesn’t want to find itself too beholden to Google.
But the company is cutting itself off from so many prospective customers that it’s unlikely to attract much interest from app developers already taxed by creating products for iOS and Android.
- Consumer Discretionary
- Technology & Electronics