Another research firm, Canalys, last week said that smartwatch (which it calls smart wearable bands) shipments grew dramatically in the first half of 2014 compared to the year earlier period, with about 1.8 million shipments. Canalys said that the LG G Watch, Moto 360 and others coming soon have off-the-shelf smartphone components inside, helping them get to market sooner.
Apple, on the other hand, will make extensive use of custom components in its smartwatch, Canalys predicted. "New products will be launched at IFA, but most technology companies are waiting to see what Apple will do first," Canalys said in a statement. "The market will see dramatic changes in the coming months."
Rob Enderle, an analyst at Enderle Group, also expects Apple to launch a smartwatch in the fourth quarter.
"We need one of the companies to set the market," he said. "Right now, folks don't know what they want in a smartwatch, at least not broadly. Apple traditionally sets the market and defines what a good product should have, which then allows others to compete for the greatest value product that supplies the features and design set."
Round watch-like designs like the Moto 360 seem to be pulling the greatest interest today, Enderle said, even though designs are "all over the map."
Meanwhile, features and functions are also all over the map, he said, while exercise and health apps and embedded pulse meters appear to be the biggest drivers of sales. "The problem is that health isn't as broad a category as communications or entertainment, which is core to [previous] successful Apple offerings," Enderle added.
"If you wanted to build a smartwatch now, you'd go round, emulating a luxury watch look, and you'd focus on exercise/health," Enderle said. "But if one of the vendors, probably Apple, can set the class to a broader feature set, the potential demand increases dramatically."
Enderle's insights were similar to those from Jan Dawson, chief analyst at Jackdaw Research, who last week said the smartwatch market is thus far "underwhelming." Dawson said Apple could have the ability to reinvent the smartwatch category, but is not the only one who could.
One of the most pessimistic about the potential smartwatch market is Patrick Moorhead, an analyst at Moor Insights & Strategy. He believes Apple will release a smartwatch in the next 12 months. "They have seen the tepid response to all the other watches and Apple wants to get it perfect," he said.
One feature that needs to be improved and promoted in smartwatches is voice-activated controls, Moorhead said. "Early implementations perform quite poorly, yet the voice control feature is more important on a smartwatch than on a phone," he said.
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