Pilot projects of smartwatches used in business and industry applications are emerging. For example, in June, air transport IT vendor SITA and Quebec City Jean Lesage International Airport announced use of Apple Watches for the airport's workforce. Duty managers are able to get flight updates and gate changes delivered right to their wrists, which is quicker than consulting a tablet.
Focus on new features: camera and cellular
Samsung has dropped its use of a camera that appeared in earlier versions of its Gear smartwatches running on Android, which first appeared in late 2013.
McCarty said the camera functionality wasn't popular, but didn't elaborate.
Llamas said the camera on original Gear smartwatches didn't function well and didn't take good photos. There were also privacy concerns with the smartwatch camera, since the smartwatch was small and could be easily hidden.
"You could take pictures when nobody knew so there were negative reactions," Llamas said. "It was regarded as creepy, and the pictures didn't look that great anyway."
Given Samsung's decision to drop the camera, it's interesting that some rumors have suggested Apple will add a FaceTime camera to the second-generation Apple Watch. A FaceTime camera might not need to be high quality and might not pose the same privacy concerns as Samsung's camera did, some analysts said.
The potential addition of cellular connectivity to the next Apple Watch could be big selling point. At Samsung, McCarty said that business users are especially eager to separate the smartwatch from the smartphone via cellular, as long as they can pay for just one phone number for all their devices, including smartphones, tablets and smartwatches.
AT&T has focused heavily on such technology, announcing NumberSync in October which lets users assign their primary phone number to wearables and other devices. Other U.S. carriers are expected to follow suit, but Samsung can already use its own servers to provide a single phone number for Verizon and T-Mobile users with multiple Samsung devices, McCarty said.
The future for smartwatches
While IDC sees 42% annual growth for smartwatches through 2019, the market will probably only reach 88 million smartwatches shipped in 2019 — a small fraction of the overall smartphone market.
Part of the problem with judging the smartwatch market is that so many people expected Apple, especially, to see big smartwatch successes like it had with its iPhones. But Llamas and Ubrani noted that even Apple's first iPhone didn't have all the features that later generations had, which led to escalating sales.
"It's going to take a couple of generations for smartwatches to catch on, with better sensors and batteries," Ubrani said. "Most important, the smartwatch developers aren't there yet."
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