Samsung watch is a threat to Apple

Samsung´s Smartwatch. Much More Than A Product Threat To Apple

Samsung´s Smartwatch. Much More Than A Product Threat To Apple

August 28, 2013

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Finally rumors have been confirmed. Yesterday Samsung revealed that the launch of its much anticipated Galaxy Gear smartwatch will take place at their own event at the IFA consumer electronics fair in Berlin on September 4.
Although it´s known that both Apple and Samsung have been working on the smartphone category for quite some time now, it is a kind of surprise that in the end Samsung won the race.That might have major consequences for the communications and electronics market. Most of all it probably will change the dynamics between Samsung and Apple.
It will be the first time that Samsung takes the lead in entering a promising new product category. And it comes at an awkward point of time for the California-based electronics giant. Apple´s last quarter sales and profits were again rather weak, it has not launched any break-through innovation for many months, it is distracted by activist investors Carl Icahn and David Einhorn (most likely there are many more of them behind the scenes), it´s involved in multiple legal battles over patent infringements, and it is not clear if Apple has a convincing strategy to cater to the lower end of the market without diluting its premium image (which experts argue is needed to fully succeed in emerging markets and to fight off cheaper Android devices in many markets in the world).
Likely Features of the Galaxy Gear smartwatch
In theory so-called smartwatches have been around since the 70s (remember Hewlett-Packard´s HP-O1 LED calculator watch released in 1977?). When Samsung, however, will launch its Galaxy Gear smartwatch it is expected trying to redefine the market.
It will feature a powerful dual-core processor, a built-in camera, small speakers on the clasp of the watch, and is designed to pair up to devices with Bluetooth 4.0. A built-in accelerometer may allow users to turn on the screen by moving their wrists toward their eyes. The OLED touch screen seems to be square-shaped and will measure roughly 2.5 inches diagonally (and 3 inches including the case). This would make Samsung's smartwatch larger than the ones of other niche players like Pebble which already operate in this market.
Extremely interesting is the rumor that Samsung would use its own app store to take advantage of the watch hardware. That most likely means if you want a Samsung Galaxy Gear smartwatch, you’ll need a Samsung Galaxy phone or tablet. If Samsung does require the use of its own app store for the Galaxy Gear, it'll be the company's biggest attempt yet to take control of Android. If the South Koreans really should have a go at creating a walled-garden approach of its own (like Apple did), many Android fans might not like such an approach.
How Apple is Expected to Respond
Besides significantly ramping up its marketing efforts by using its huge financial power Apple must quickly come out with some promising new products on its own. Those are very much needed as in the last one to two quarters Apple did not release any new breakthrough devices. On top, the new 2013 MacBook Air received only lukewarm reviews. The company will need to speed up launching the following five initiatives before the end of this year to drum up excitement, to accelerate growth, and not to fall behind Samsung. What we can expect:
iPhone 5S and 5C - Market observers expect that we will see the new iPhone 5S probably around the September/October time frame. That will position it against rival Samsung, who will introduce the third generation of the Samsung Note, the Samsung Note 3 at IFA in September.It seems now almost also certain that the iPhone 5S will be accompanied by the cheaper and more fancy-free iPhone 5C.
iPad5 and new Mini iPad - Let´s also not forget that Apple is the leader in the tablet market. It is expected that at the beginning of October, i.e. shortly after the iPhone 5S and 5C launches, the Californians will release two new iPads: iPad 5 (slimmer, lighter, more powerful) and a new iPad mini, the first with a high-resolution screen, i.e. using its Retina display on which for sure many eyes will be fixed on.
New iOS 7 Software - Around the same time Apple will come out with the new iOS 7 software. The beta versions of iOS 7 show a significant break from the past. Although a bold move, it is expected that overall people will like the changes, which make the software more intuitive and fun. The new software will help drive new phone buyers and increase the loyalty of existing users.
iWatch as Major Launch - More than anything else Apple will try to get its smartwatch on the market as soon as possible.Clearly a matter of honor. Now more than ever. Apple is even doomed to deliver a new wrist watch that many are calling “iWatch.“ It has been hiring people with adequate expertise for many months now. Most recently it recruited an ex-Nike staffer, Jay Blahnik, who worked on Nike´s Fuelband which is already used by 18 million people worldwide. As such Apple´s smartwatch might be more of a band versus Samsung´s Gear watch. It´ll synch to other Apple devices, will offer lots of health-related apps and features; plus other helpful communication tools such as email, clock, etc. It is expected being launched just in time for holidays and for sure Apple will play it big. Think iPhone, iPod, and iPad!
Implications for the Consumer Electronics Market
Being first-to-market means for Samsung that the stakes are high. The South Koreans will have to proof that not only they can develop a new category, but also being capable of launching a bulletproof device which does not suffer from connection drops, user interface challenges and other issues found in prior smartwatch and smartphone efforts. Saying that, many believe that the Galaxy Gear might be a winning device and at the same time Samsung´s strategic vehicle trying to take over more control of Android. The device will most likely require an app provided through the Samsung dedicated app marketplace in order to work. As such it will be an accessory exclusive to Samsung’s own smartphones and tablets.
According to Samsung the Galaxy Gear is primarily targeted at “young trendsetters.” Having obviously designed a device which aims both at “early adopters“ and at “fashion-oriented“ consumers (which most of us are in a certain way), Samsung will want to take its new “electronic accessory“ mainstream as quickly as possible. If it were successful with such a move, and chances are not bad, Samsung might be perceived as a company and brand which is about to take Apple´s nimbus away of being the most innovative and trendiest electronics company in the world. That indeed seems to be the main threat. That´s what entering the smartwatch market really is all about for both of them.
And there is another sure thing: Niche players like Pebble, The Hot watch, Sony´s Live View wearable or Motorola´s MotoACTV will need to fight hard to survive once the two electronic giants will have entered the arena of the smartwatches.
What do you think? Are you going to buy a smartwatch? Do consumers go for it?
Looking forward to hearing from you.
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Andreas von der Heydt is the Country Manager of Amazon BuyVIP in Germany. Before that he hold senior management positions at L'Oréal. He´s a leadership expert, management coach and NLP master. He also founded Consumer Goods Club. Andreas worked and lived in Europe, the U.S. and Asia.

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