Moorhead acknowledged that Microsoft needs to be in the wearable device game. "Strategically, Microsoft does need to participate in the recently-booming wearable ecosystem or potentially be left behind," he said. "But what this sheds light on is just how far behind Microsoft is and how much ground they must make up."
As in other device categories -- tablets, for one -- Microsoft has dabbled in smart watches before. More than a decade ago, it launched the Smart Personal Object Technology (SPOT) project, which ended up on a small number of wristwatches starting in 2004. SPOT-based watches were discontinued in 2008, and Microsoft pulled the plug on the underlying FM radio-based network service in early 2012.
"There's a long-term market opportunity for Microsoft here," said Moorhead. "But timing is everything. Like tablets or even smartphones, Microsoft was too early in smart watches. Now they'd again be playing catch-up."
Instead of dabbling in an area where they would likely arrive later than rivals, Microsoft should focus all energies on Windows 8, particularly its Windows Blue project, a name for both a 2013 update to the struggling OS and for a new development and release strategy that aims to refresh its software on a more faster tempo.
"Blue is the Windows 8 they should have shipped to begin with," said Moorhead. "They needed it a year ago, but if I see a two-year span of adding features, I can become a believer [in Windows 8]."
Minus success in Windows 8, Moorhead continued, Microsoft's future looks gloomy, smart watches or not. "I don't even want to think about what happens if Windows 8 doesn't work out," he said.
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