Chris Lau, Kapitall Contributor:
Ever since rumors circulated that Apple (AAPL) would develop an iWatch, additional rumors about a “smartwatch” circulated. In truth, the smartwatch is not entirely new:
already has one on the market. Sales for the Sony smartwatch are likely weak, due partly to
reviews, even from sites covering
. [More Analysis by Chris Lau:
The Pros and Cons of Microsoft's Mobile Strategy
could possibly announce an Android watch on May 15 at the Google I/O developer’s conference.
could have an iWatch on the market. Even though a search for “Apple iWatch” yields 3.12 million results on Google search, this rumor has yet to be confirmed.
Consumer interest in watches is declining, since nearly all smartphones have a clock app that makes watches unnecessary. The drop hurts brand names, but companies like
Michael Kors Holdings (KORS)
sell other products besides watches. This time around, the release of a smartwatch to market could hurt watch sales. Shares in both companies are down as investors worry about overall declines in spending:
A smartwatch revolution could take hold, if computerworld’s
turns out to be true. Some of the 8 myths are:
Myth #1: There won't be a smartwatch revolution.
Myth #2: Smartwatches will fail because nobody wears watches anymore.
Myth #3: Smartwatches are for people too lazy to take the phone out of their pockets.
Myth #4: Smartwatches are bulky.
Companies that could find new sources for revenue include
Google. LG (LPL)
is also said to be making a smartwatch. Samsung is reportedly working on a smartwatch, too.
The revolution for mobile devices is moderating, with growth limited in the phone and tablet space. Talk of a smartwatch could be an added source of growth, but investors should not expect sales to be strong. Consequently, investors should not assign a higher multiple for companies reportedly making a smartwatch.
Chris Lau, Kapitall Contributor