The larger point is that Sony Corporation (ADR) (NYSE:SNE) is committed to making Android-based watches for the long-haul. As its name implies, the SmartWatch 2 is the Japanese electronics giant’s second attempt (the first one wasn’t well received). Come next year, the SmartWatch 3 could be far superior to Samsung’s Galaxy Gear.
Of course, Sony Corporation (ADR) (NYSE:SNE) is challenging Samsung in all mobile areas. Sony Corporation (ADR) (NYSE:SNE)’s new Xperia tablets and smartphones have been well received; the company just recently released a phablet, and new tablets are likely to follow. All of these devices run Android, meaning that loyal Samsung customers, locked into the Android ecosystem, can quite easily jump ship.
The coming iWatch
Apple Inc. (NASDAQ:AAPL) won’t have to worry about competition from Sony Corporation (ADR) (NYSE:SNE), or any other major electronics firm. Other than indie projects like the Pebble, Apple’s iWatch will very likely be the only smartwatch to interface with iOS devices.
Apple Inc. (NASDAQ:AAPL)’s management has never officially acknowledged the existence of a watch, but various reports have indicated that the King of Cupertino has one in the pipeline. As with Samsung, fears about smartphone saturation have weighed on Apple’s shares, but a hot new device could change that.
And Apple Inc. (NASDAQ:AAPL) could benefit more from its watch than Samsung. Assuming it’s priced competitively, a customer who slaps down $300 for an iWatch would be unlikely to leave the iOS ecosystem (less their expensive watch become worthless). If Samsung does as it says and makes its watch work with other Android phones, customers can buy the Galaxy Gear in October and then switch to a different phone manufacturer at a future date.
Samsung’s peak
With its high price tag, limited connectivity, and poor reviews, the Galaxy Gear isn’t likely to sell particularly well; and that, coupled with a smartphone market that’s seemingly saturated, might not bode particularly well for Samsung’s investors in the near term.
Longer term, Samsung has to contend with other Android OEMs such as Sony Corporation (ADR) (NYSE:SNE). Samsung’s rival Apple Inc. (NASDAQ:AAPL) doesn’t have to worry about that, as it maintains full control over its iOS mobile operating system.
To be sure, Samsung is an enormous and complex company. But with its mobile division making up the bulk of its earnings and accounting for most of its recent growth, Samsung’s best days might be behind it.
The article Samsung’s Smartwatch Looks Like a Dud originally appeared on Fool.com and is written by Sam Mattera.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.
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