Time is Running Out for Apple's Long-Awaited iWatch

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SMARTWATCH SEASON
Michael Sohn/AP
The smartwatch craze appears to have come and gone without changing the world. Pebble -- the Kickstarter-funded company the kicked off the revolution of Web-tethered wristwatches -- has been a fringe player at best. Samsung (SSNLF) -- the world's largest maker of smartphones -- hasn't had a lot of success with its Galaxy Gear line, now in its second incarnation.

Silent through this ho-hum movement is Apple (AAPL), the one company that many figured would be the game changer in this once-promising niche of wearable computing.

There was some hope that Apple would use its Worldwide Developers Conference earlier this month to announce its entry into the smartwatch market and woo top developers to start coding applications for the iWatch.

It didn't happen. However, shortly after the conference closed, reports began to surface about Apple entering the market in October. This will be a big story if it happens, but it may be too late.

Rock Around the Clock

The smartwatch was supposed to change everything. Pebble's initial shortcomings -- it didn't make calls and ran only a limited number of apps -- seemed to have been addressed when Samsung and Qualcomm (QCOM) introduced fancier fare.

However, with Samsung limiting its devices to work only with select Galaxy devices and Qualcomm's Toq coming up short due to a lack of voice commands and native input options, we find ourselves with a revolution that appears stuck in the mud.

Apple could change that, but the world's leading consumer tech company faces an uphill battle to overcome obstacles that have soured the market's enthusiasm for timepieces with computing features.

Time is Ticking Away

Apple investors are hungry for innovation in a new product category. Mac sales have stalled; the iPod has been declining in popularity for a couple of years; and even the iPad saw a surprising drop in sales in the latest quarter. The iPhone continues to be the workhorse for Apple, and a little diversification wouldn't hurt.

Tim Cook could also use a defining new product. The Mac, iPod, iPhone and iPad all came to life under Steve Jobs. Cook is now closing in on three years as Apple's CEO, and investors will begin to turn on him if the tech bellwether doesn't have a new sales workhorse in place if and when the iPhone begins to fade.

It's easy to fathom how the iWatch could be successful. Outdoor recreation enthusiasts could check navigation without having to fumble through their pockets for their smartphones. Activating Siri would be a breeze. Videoconferencing through FaceTime -- even on a small wristwatch screen -- seems like a natural idea.

Apple could clearly raise the bar here. It's not the kind of company that shows up fashionably late to the party unless it's bringing something new to the table.

But it's about more than just a single wrist-hugging gadget. The iWatch could help spark sales of iPads and iPhones if its features are tied exclusively to Apple's iOS platform, though that comes with a juicy caveat: Samsung got burned by making its Galaxy Gear too restrictive. However, if it's a hit, it will tie Apple fans closer to Apple's mobile operating system. You're not likely to switch to Android when your iPhone contract runs out or your iPad grows stale if you have recently invested in an iWatch.

Apple will have to hope that it's not too late to get it right with the smartwatch. There's plenty at stake if it's successful, but time is running out for the smartwatch to matter in the marketplace.

Motley Fool contributor Rick Munarriz owns shares of Qualcomm. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Qualcomm. Check out this special free report to see what Motley Fool analysts learned from the secret "dream team" working on Apple's newest smart device, and how one small company holds to key to making it happen.

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calderasf

I'm waiting for the Iring with it's 1/4 inch screen.

June 17 2014 at 7:47 PM Report abuse rate up rate down Reply
William J

I put my watch away shortly after purchasing my iPhone. Maybe they shouldn't be pushing a smart watch. Name it something else. Like Health Monitor. I'd never buy another watch. But I might buy a Health Monitor is it does something more than hearbeats and blood pressure.

June 17 2014 at 5:56 PM Report abuse rate up rate down Reply