Electronic giants to smarten up watches as next big thing

Mariko Yasu and Grace Huang Tokyo

With growth slowing in the $358 billion (R3.2 trillion) handset market, Apple and Samsung Electronics are developing digital watches that allow users to make calls, check map co-ordinates, or monitor their physical activity.

They might want to talk to Tokyo-based Sony, whose feature-laden SmartWatch, on sale for more than a year, is not mesmerising the masses. Priced at $130, Sony’s 3.3cm touchscreen watch wirelessly connects to Android smartphones using Bluetooth.

The gadget alerts users to calls and allows them to reply to e-mails or texts with an array of prewritten messages.

It even connects to Facebook and Twitter and controls a wearer’s phone-based music library.

The SmartWatch, which is about the size of an iPod Nano, is a slightly smaller successor to Sony’s LiveView watch. Introduced in 2010, it had more limited features and was hobbled by kinks.

The newer model is more stylish, although users cannot enter messages and it sometimes requires daily recharging and a stable connection to tell time reliably.

“Sony was ahead of its rivals to release a watch, but it takes more than an idea to create a hit product,” said Keita Wakabayashi, a Mito Securities analyst in Tokyo. “It’s about bringing a product that has functionalities that people would want and marketing the product in the right way.”

Technology market research firm ABI Research estimates that 1.2 million of these digital watches will be sold globally this year, generating about $370 million in sales. By 2015, ABI projects, sales will increase more than twentyfold.

Sony’s promotion of its own, however, has been tentative.

“It is an accessory for smartphones and not a product we expected a huge shipment” of, said Yu Tominaga, a Sony spokesman, who declined to say how many watches the company had sold. Sales “haven’t been bad at all”.

Roger Kay, the president of market researcher Endpoint Technologies Associates, said the SmartWatch was too expensive for an add-on, too power hungry and was too buggy at its introduction.

Shoji Nemoto, a Sony executive in charge of technology strategy, said last August its research had been too inward-looking and deliberative and should focus more on customer feedback.

“I don’t think the brand carries as much weight as it used to,” William Stofega, a programme director at market researcher IDC, said of the company as a whole. “They don’t really market it as well as they should.”

Amid the setbacks at the main electronics business, which was unprofitable for a second consecutive year, executives will give up their bonuses. The board backed a proposal from chief executive Kazuo Hirai that management forgo bonuses worth 30 percent to 50 percent of their annual pay in the year to March.

Hirai pledged to revive Sony’s electronics operation by cutting 10 000 jobs and shifting away from the unprofitable television unit after he took the top job in April last year. The stock has been underperfoming Japan’s benchmark index. Sony gained 28 percent, while the Nikkei 225 stock average rose 46 percent over the past year.

The first companies to win over consumers with smartwatches could lock users into their platforms, boosting sales of phones, tablets, apps, and TVs. Apple alone had a $6bn opportunity in its iWatch, Oliver Chen, a Citigroup analyst, estimated in March.

Other competitors include the Italian i’m Watch, which is selling a $399 smartwatch it says has access to hundreds of apps, and Pebble Technology, which has raised over $10m on Kickstarter.com for a $150 watch compatible with both Android and Apple’s iOS. By the end of March, Pebble had shipped almost 55 000 watches ordered over Kickstarter. – Bloomberg