Samsung Unveils Galaxy Gear Smartwatch

Sweety Rai

4th Sep, 2013

Which raced ahead of Apple Inc. AAPL +2.23% last year to become the world's biggest maker of Smartphones, unveiled a highly anticipated watch-phone called the Galaxy Gear at a trade show in Berlin on Wednesday, opening a new front in the battle over "wearable" devices.

Samsung is attempting to shake off long-running criticism leveled by Apple proponents that the South Korea company has been a follower rather than an innovator in the competitive market for high-end devices. The release of the Galaxy Gear, which is slated to go on sale as early as this month with a price tag of $299, comes ahead of an expected smartwatch from Apple.

Samsung's launch highlights its aggressiveness in getting new products to the market more quickly than rivals to avoid further patent litigation. Apple accused Samsung in 2011 of allegedly copying the design and the feel of the iPhone and iPad. Since then, the two companies have been battling it out in global courts alleging patent infringement.

The relatively limited functionality of Samsung's smartwatch, and small rectangular screen, likely will disappoint those who had expected a watch with a full slate of functions and a bendable display that would conform to the shape of the human wrist.

But J.K. Shin, the head of Samsung Electronics mobile communications operations, called the Galaxy Gear a new "trendsetting device," which he said could eventually pave the way for the smartwatch to become an indispensable part of daily life, in the same way that smartphones—once seen as a niche luxury product—broke through to become a mainstream product.

The Galaxy Gear won't be marketed as a stand-alone device. Instead, it is being pitched as a companion device to its latest generation smartphone-tablet called the Galaxy Note 3, which the company also announced Wednesday.

Users who buy both devices will be able to read messages, check the weather and take photos on the smartwatch, which will be synchronized to the smartphone and which will run on the Android operating system.

The device will also come preloaded with more than 60 applications, including a step-counting pedometer and S Voice, a voice-activated app akin to Apple's Siri.

But this isn't a device for conducting complex tasks like composing emails or downloading music. It also requires a separate battery charger and isn't yet compatible with Samsung's flagship Galaxy S4 smartphone, though the company says that it is working on that.

In a nod to the Galaxy Gear's initial hurdles, Samsung remained guarded about how well the device would be received by the market, saying that at first, the company saw the Galaxy Gear as a niche product targeting younger, tech-savvy early adapters.

Some industry watchers, too, approached the Galaxy Gear with only measured optimism. Neil Mawston, an executive director at research firm Strategy Analytics said that smartwatch manufacturers are "clearly still in the experimental phase today of trying to figure out what consumers and businesses really want."

"The first generation of smartwatches this year, from Samsung and others, is likely to see modest global sales in the near-term," Mr. Mawston said, forecasting 1.2 million smartwatches to be shipped world-wide in 2013, rising to 7 million in 2014.

Though the Galaxy Gear is Samsung's first smartwatch, the company released a watch-phone, the SPH-WP10, in 1999, to limited success. Samsung claims that the device was the first in the world to combine the functions of a cellular phone and a digital watch.

For all of the hoopla around the smartwatch, Samsung's broader fortunes will rest more heavily on how quickly consumers take to the Galaxy Note 3 phablet, the hybrid phone-tablet. The new version of the Note will test whether the Samsung's strategy of launching multiple products in different sizes remains a viable strategy.

Based on data from IDC, Samsung's Smartphone market share in the second quarter was 30.4% ahead of Apple's 13.1%. But like its competitors, Samsung has seen a slowdown in its mobile business with margins being squeezed by high marketing costs despite a record profit in the second quarter. The company has been spending billions of dollars on marketing annually including expenses for lavish product launches. The Berlin event has gathered just as much hype as the Galaxy S4 launch at Radio City Music Hall in New York in March.

The new Galaxy Note, which is slightly larger than its predecessor, is better equipped for multitasking, the company says, allowing users to open multiple frames at once. But it also gives the device's stylus, called the S Pen, a more prominent role, testing users' historical resistance to relying on the tool.

Steve Jobs, the late co-founder of Apple, which featured a stylus in its 1990s-era Newton devices, famously mocked the idea of a stylus in 2007, dismissing the tool with a simple "Yeechh." In 2010, he said of competitors' devices: "If you see a stylus, they blew it."