Universal Display Corporation (OLED), LG Display Co Ltd. (ADR) (LPL), Apple Inc. (AAPL): Here’s the Best Derivative Play from Samsung’s Smart Watch

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After months of speculation regarding when, exactly, the wearable technology revolution might truly begin in earnest, the folks at Samsung just did everybody a favor Wednesday by setting a hard date of Sept. 25.

Specifically, that’s when the company says its new smartwatch, dubbed Galaxy Gear, will be made available in more than 100 countries.

Samsung Galaxy Gear

Image source: Samsung

With a surprisingly high suggested retail price of $299, it remains to be seen whether these nifty little accessories will fly off the shelves at first. Even so, you’ve got to admit there’s undoubtedly some allure to the device.

Most notably, Galaxy Gear enables seamless integration with Samsung’s smartphones, through which users can, among other things, use the built-in microphone to make and receive calls, dictate text messages and emails, set alarms, and create calendar entries. In addition, Galaxy Gear sports a 1.9 megapixel camera built into its wrist strap, as well as a gyroscope and accelerometer to track your physical activity.

Finally, Galaxy Gear will come standard with a 1.63-inch touchscreen AMOLED display, 800 MHz processor, 512 MB of RAM, and 4 GB of built-in storage, giving you plenty of room to save pictures, videos, and install the dozens of apps which will be available for download when Galaxy Gear launches.

Here’s where to invest

But while Samsung has plenty riding on the success of Galaxy Gear, there’s another company which stands to gain even more from the Korean giant’s latest innovation.

Growth-hungry investors, meet Universal Display Corporation (NASDAQ:OLED), an organic LED specialist which happens to be directly responsible for the technology behind every vibrant AMOLED screen on Samsung’s various electronic devices.

For reference, that’s an enviable list including (but not limited to) the aforementioned Galaxy Gear display, the 5.7-inch screen on the newly announced Galaxy Note 3 , and the ridiculously popular 5-inch AMOLED display in Samsung’s flagship Galaxy S4 smartphones.

Universal Display Corporation (NASDAQ:OLED), for its part, makes money through both licensing its more than 2,700 OLED-related patents, and by supplying the host and emitter materials required to manufacture OLED displays in the first place.

As it stands, however, some Universal Display Corporation (NASDAQ:OLED) investors may have already written off Galaxy Gear as an unimportant sideshow.

After all, the larger screens on smartphones and tablets obviously dictate volumes of materials from Universal Display Corporation (NASDAQ:OLED), and it’s unlikely Galaxy Gear’s 1.63-inch screen will move the needle much in and of itself. Additionally, many shareholders are rightly excited as UDC customers like Samsung and LG Display Co Ltd. (ADR) (NYSE:LPL) ramp up their manufacturing efforts for their recently launched large-screen OLED televisions, the demand for which will admittedly dwarf that of Galaxy Gear as economies of scale kick in and prices come down.

Heads you win, tails they lose

But don’t make the mistake of selling Galaxy Gear’s influence short.

Remember, Samsung’s smart watch should serve to encourage more consumers to buy larger Samsung devices sporting OLED displays.  And as long as Apple Inc. (NASDAQ:AAPL) chooses not to utilize OLED in its own devices — something I’m still convinced will happen eventually — anything that encourages more consumers to use Samsung’s OLED-driven products is good for Universal Display Corporation (NASDAQ:OLED).

But that’s also not to say Galaxy Gear won’t face stiff competition going forward, either.

Imagine if Apple Inc. (NASDAQ:AAPL) were to unveil its own smart watch during next week’s highly anticipated media event. Recall CEO Tim Cook’s June comments on wearable computing: “the wrist is interesting,” and “natural.”

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