Wearable technology is quickly evolving into the next big consumer electronics market. Companies like Samsung, LG, Sony (SNE), Apple (AAPL), and Motorola (MSI) are racing to get their newest smart watches to the market, especially as the holiday season approaches. Samsung alone has released nearly 10 smart watch variants over the past year, and although the market is far from saturated, it is highly competitive. However, one major player is missing: Microsoft (MSFT), the second largest technology company in the world. For some reason Microsoft has yet to jump on the “wearables” bandwagon. However, this could soon change; as indicated in a recent Forbes report, Microsoft could soon introduce a smart watch (possibly in the coming weeks).
There's a lot of irony in Microsoft's being the last tech giant to release a smart watch. This may come as a surprise to most readers, but Microsoft actually pioneered the "wearable" industry back in 2004 with its “Spot” project. Microsoft introduced a line of watches, almost a decade ago, in collaboration with designers such as Fossil (FOSL) and Tissot. Spot watches used FM radio waves to stream news, updates, and outlook email to customers, all for a annual subscription rate. Unfortunately for Microsoft, cellular broadband networks overtook previously popular radio waves; hence, Spot watches could no longer receive signals and quickly became obsolete. Microsoft officially ended its Spot project in 2008.
Now, despite a hiatus in the market, smart watches are making a vengeful comeback. No longer are smartphones a viable communication platform. Instead, consumers now require complementary high-tech wearable devices.
However lucrative the introduction of a smart watch may be for Microsoft, the company faces many challenges. One of Microsoft's biggest problems is that it doesn't have a sizable smartphone presence. Currently, Microsoft controls about 3% of the consumer smartphone market with its Windows Phones. The majority market share rests with a plethora of tech companies that utilize the Android platform, while Apple controls 14%. Android-centered companies, like Samsung, and Apple are uniquely positioned to sell their smart watches because of their existing mobile device popularity. Since Microsoft currently lacks a smartphone customer base, it must release an open source smart watch.
Early reports indicate Microsoft has pursued such a path. Its smart watch will supposedly have the capability to pair with any smartphone operating system. This offers consumers "choice," which is never a bad thing. Hypothetically, Microsoft's smart watch will just as easily pair with an iPhone as it will a Samsung Galaxy. Additionally, Microsoft’s watch will reportedly contain a constant heartbeat monitor and two days of battery life (both of which are major improvements over current smart watches).
While Microsoft is no doubt late to the smart watch party, it would be unwise to count them out. The tech company has expressed very little interest in the wearables market, but there's simply too much excitement for Microsoft to hold out. In actuality, Microsoft's hand may have been forced; in order to maintain growth standards, Microsoft must enter the smart watch market. Fortunately for shareholders, all indications point to its being ready to do so. Expect a new product announcement from Microsoft in the upcoming weeks.