Just In Time? Smartwatches Could Provide Mobile Market Boost

Wearable devices could be the next blockbuster innovation in the mobile space, with some solution providers predicting the market may even start to take off by year-end.

With research firm IDC reporting slowing growth of smartphones and a recent NPD DisplaySearch report revealing that the tablet market is actually retracting, wearables could provide a mobile market boost.

NPD DisplaySearch found that tablet shipments in North America were down 13 percent year over year in in the first quarter of 2014 to 13.4 million units. By comparison, tablet shipments in North America increased 33 percent in 2013. This is the first time since 2010 that the tablet market has experienced a year-over-year reduction.

[Related: That's About The Size Of It: Tablet Market Declines For The First Time]

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"I think [wearables are] a huge market, and I can almost guarantee you that 10 years from now we won't be sticking our hands in our pockets to check out our phones. That will not be the case," said Raul De Arriz, national government sales manager for Small Dog Electronics, Waitsfield, Vt., an Apple specialist. "I see this market growing immensely in many different directions. Smartwatches are just one aspect. It's going to have to refine, and refinement will have to do with the quality of the component, the ability to run well on a battery. But I see it quickly getting better just like phones did."

There is definitely an uphill climb ahead for wearables, as just 510,000 smartwatches shipped in the first quarter of this year, according to market intelligence firm ABI Research. In the same report, however, ABI predicts the market will expand greatly this year, forecasting 7 million smartwatches will be sold by year-end.

The first-quarter shipment numbers came before the release and even the official announcement of Android Wear at Google I/O late last month.

At the event, Google announced three smartwatches that will be based on the Android Wear operating system, including the Moto 360, which is expected to launch in August; the LG G watch; and the Samsung Gear Live, both of which hit stores last week.

NEXT: What's Next For Wearables

The wearables market is going to take off, according to Small Dogs Electronics' De Arriz, but it’s not ready yet as the technology needs to work seamlessly between the hardware and software and be convenient for users.

"The major software manufacturers have to get in with their own hardware for it to work seamlessly," he said. "Apple and even Microsoft may have an advantage if they make their own wearable devices as opposed to someone making the hardware and someone else making the software."

LG, Google, Sony, Samsung, Motorola and others already have thrown their hats into the wearables ring, and industry analysts have said they expect Microsoft and Apple to join the party by year’s end, though neither company has made an official announcement. There also is speculation that Amazon may be working on a wearable device behind the scenes; Babak Parviz, the former head of development for Google Glass, just revealed that he had joined the company.

"I think [wearables] will catch on, probably more as an accessory display to your mobile device rather than a replacement," said David Felton, founder of Canaan Technology, a Microsoft partner based in Norwalk, Conn. ’A natural evolution for the product will be health care and life safety.’

NEXT: Health Care A Good Fit

In the health-care and fitness space, Apple at its World Wide Developers' Conference in June revealed partnerships with the Mayo Clinic and Epic Systems, an electronic health records company, when it released its HealthKit app.

Google unveiled Google Fit at its developer’s conference and already has partnerships with Adidas, Basis, Noom and others. Both Google and Apple have had their hands in health and fitness wearbles, Apple with the Nike+ FuelBand, and Google with devices such as the Samsung Gear Fit smartwatch.

Microsoft is working on a sensor-packed fitness band that sends push notifications like a smartwatch but, unlike the competition, it works on an open platform, making it compatible with Android and iOS in addition to Windows Phone, as reported by tech analyst Paul Thurrott. This device is expected to be released in the fourth quarter.

As for Apple, its rumored iWatch is expected to do very well on the market, selling between 30 million and 60 million units in the first 12 months of its release, according to a report from Morgan Stanley that was obtained by Fortune.

"Apps will drive the adoption of wearables. The initial apps we see on this revolve around health and fitness, and we'll see apps that excel in other spaces as well,’ said Stephen Monteros, vice president of business development and strategic initiatives at Sigmanet, an Ontario, Calif.-based Apple and Microsoft partner. "I think there will be some interesting apps running on these devices. There is definitely a market for it; it just hasn't taken off yet. It's just new, and it takes time. If someone develops some sort of killer app, then everyone will do it."

PUBLISHED JULY 18, 2014