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Will Apple Inc. (AAPL) Build the Best Smartwatch?

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It’s rare to see a watch on the wrist of anyone under the age of 40. After all, consumers need only look at the computer in front of them or the smartphone in their pocket to find out the time, date, temperature, or location of the nearest clock.

Apple Inc. (NASDAQ:AAPL)

As electronics manufacturers realize that time of day is only the beginning of the information consumers want to have at their disposal, big-name companies are scrambling to be the first to satisfy that desire. The “smartwatch,” as the industry has dubbed it, will act as a more accessible version of a smartphone. Call it Google Glass for the wrist. These devices will provide an at-a-glance look at what’s happening on the smartphone tucked into a consumer’s purse.

Sony tries again

Sony Corporation (ADR) (NYSE:SNE) was among the first big names to attempt a smartwatch that communicated with a user’s smartphone. But since it’s only compatible with an Android model, iPhone and Windows Phone users are out of luck. Only certain Android phones worked with the first-generation smartwatch, narrowing the market to consumers who were willing to let their watch drive their choice of phones.

The release of the Sony Corporation (ADR) (NYSE:SNE) watch went largely unnoticed, but now, competitors like Pebble have popped up. Sony hopes to gain more of the market with the release of its Smartwatch 2, still only usable with Android devices. Sony promises the longest battery life of any smartwatch with its new device, as well as a color display not found in competing smartwatches.

The company released the Smartwatch 2 just ahead of its earnings report, hoping to continue to make a profit. For its most recent fiscal year ending in March, Sony reported its first profit in five years. Unfortunately, this profit was largely due to restructuring and staff reduction of more than 10%. In its most recent quarter, the company reported a $9.5 billion profit (93.91 billion yen), compared to a sizable loss a year earlier.

Because the success was due to restructuring, analysts are skeptical the company can continue to turn in this type of profit. However, Sony is optimistic, predicting a net profit of more than 50 billion yen (roughly $5 billion) in the coming fiscal year. If the Smartwatch 2 is a big hit, the company may be able to overcome its recent losses.

Apple begins trademarks

For months, rumors about an Apple Inc. (NASDAQ:AAPL) smartwatch have been hot and most recently the company trademarked the name “iWatch” in Taiwan, Russia, Mexico, and Japan. The iPhone’s market share has declined more than 10% since December and now owns only 41% of the U.S. smartphone market.

Android-based phones now comprise more than half of the smartphone market. With this in mind, if Android-compatible smartwatches take off, Apple could lose customers due to lack of compatibility.  Of course, compatibility may not be a problem if Apple Inc. (NASDAQ:AAPL) can design the best product.

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