Apple, Samsung looking to produce smart watches as Sony's time passes

by Olga Kharif


With growth slowing in the $358 billion handset market, Apple Inc. and Samsung Electronics Co. are developing digital watches that allow people to make calls, check map coordinates or monitor their physical activity.

They might want to talk to Sony Corp., whose feature-laden SmartWatch, on sale for more than a year, isn’t mesmerizing the masses. Priced at ¥10,000 to ¥13,000, Sony’s 1.3-inch touchscreen watch wirelessly connects to Android smartphones using Bluetooth technology. The gadget alerts users to calls and allows them to reply to email messages or texts with an array of prewritten responses.

The SmartWatch, 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 can’t 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 Co. analyst who rates the shares neutral plus. “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 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. Sales “haven’t been bad at all.”

The company expects sales to grow as Sony and other developers add to the watch’s library of more than 200 applications. Its appeal is limited because it’s only compatible with Android devices.

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

Sony’s failure to gain traction with the SmartWatch is the latest in a long line of first-mover advantages the electronics giant has squandered. The Walkman and Discman dominated the global portable music player market for decades before the advent of the iPod in 2001.

A year earlier, Sony began selling the Clie, a Palm OS-based personal digital assistant that allowed users to listen to music, play games and watch videos. The Clie didn’t catch on, and Sony pulled it in 2005. Despite owning the distribution rights to thousands of popular songs and films, Sony failed to rival Apple’s iTunes for smartphones and tablets.

Sony released its first e-reader, the Portable Reader System, in 2006, a year ahead of Inc.’s Kindle. In 2009, although Sony’s e-book library carried 600,000 titles, twice as many as Amazon’s, the PRS didn’t resonate with consumers.

Shoji Nemoto, a Sony executive in charge of technology strategy, said last August that the company’s research has 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 program director at market researcher IDC, says 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 straight year, executives will give up their bonuses. The board backed a proposal from CEO Kazuo Hirai that management forgo bonuses worth up to 50 percent of their annual pay in the year ended 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 first companies to win over consumers with smart watches could lock customers into their platforms, boosting sales of phones, tablets, apps, and TVs. Apple alone has a $6 billion opportunity in its iWatch, Oliver Chen, a Citigroup Inc. analyst, estimated in March.

Other competitors include the Italian i’m Watch, which is selling a $399 smart watch it says has access to hundreds of apps, and Pebble Technology, which has raised more than $10 million on 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.

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