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High-Tech SmartWatches Won't Come at a Low Price

NEW YORK ( TheStreet) - If you're thinking about being among the first to own a shiny new super-large Samsung Galaxy Note 3 smartphone and matching Galaxy Gear "smartwatch" get ready to break open more than one piggy bank. These "bleeding edge" devices won't come cheap.

The third-generation Galaxy Note 3 is physically the largest model in Samsung line of Google/Android (GOOG - Get Report) phones. Galaxy Note phones are so large they've spawned the term "phablet" meaning half phone half tablet. The newest model, introduced this week, has a monster 5.7-inch touchscreen (up from 5.5-inches in last year's Galaxy Note 2), 3 GB of RAM and a 13 megapixel camera. Despite the larger screen and all the new features the GN3 weighs a half ounce less than its predecessor. On paper it looks like quite a device.

Galaxy Gear is Samsung's first Android "smartwatch". The device will have a 1.63-inch AMOLED touchscreen (320 by 320 pixels), 512 MB of RAM, 4 GB of storage and a 1.9 megapixel strap-mounted camera. Upon release the Galaxy Gear will only sync with the Galaxy Note 3 phone or Samsung newly announced Galaxy Tab 10.1 Android tablet.

Reaction to the new smartwatch has been mixed. The Street's Technology Editor Chris Ciaccia got to see the Gear at a New York City event and wasn't impressed at all.

Samsung's Galaxy Gear smartwatch will retail for $299. The new GN3 phone will cost a lot more than that.

AT&T (T - Get Report) is now asking $299 for the Galaxy Note 3 when you agree to a two-year service contract. If you want the phone and the smartwatch AT&T will package them together for $599 (with that same two-year phone contract). AT&T pre-orders begin today.

According to leaked internal documents, Verizon (VZ - Get Report) is also going to ask $299 (with the usual two-year contract) or $699 without a service plan. Supposedly, if you buy the $299 smartwatch at the same time you'll receive a $100 discount for the combination. Reported total contract price: $498.

And then there is T-Mobile (TMUS - Get Report) and its new pricing policy. T-Mobile is asking only $199 up front for the phone plus a monthly payment of $21 for two years. That comes out to a mind-numbing $703 to buy the phone (similar to Verizon's non-contract price). Add the $299 Samsung smartwatch and you have a combined price of more than $1,000.

Watches are now a difficult sell. Today's younger generations prefer not to wear wristwatches - smart or dumb. When they want to know the time they just look at their smartphones. So, even though full-featured portable computing devices are "in" (and laptops are "out") smartwatches could be ignored by the buying public. Samsung chief rival Apple is especially aware of that possibility.

We know that Apple (AAPL - Get Report) is reportedly about to announce at least one and probably two new iPhones at its California event next Tuesday. Pricing will be critical. Adding revolutionary new features and improving hardware is costly. Apple will have to be careful to keep iPhones affordable.

But it will also be interesting to see whether Apple will announce a smartwatch of its own next week. Rumors of an iWatch have been swirling for years. Now that Samsung first wearable device is out of the bag it might be the right time (before the holiday shopping season) for Apple to show the world what it has been working on too. Or, an Apple might just wait and see how the world reacts before jumping into the smartwatch marketplace.

--Written by Gary Krakow in New York.

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