Apple jumps into wearable fray with Apple Watch smartwatch

The new device, with a sapphire-crystal display and pulse-tracking sensors, starts at $349 and will be available early next year.

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Apple reveals the new Apple Watch. Apple

Apple on Tuesday unveiled the new Apple Watch smartwatch, diving into the wearables market for the first time.

CEO Tim Cook called the smartwatch a "breakthrough" product, describing it as a "comprehensive" health and fitness device, walkie-talkie, remote control for the Apple TV streaming-box, among many other capabilities.

The device is "the most personal device we've ever created," he said. "Because you wear it, we invented new intimate ways to connect and communicate directly from your wrist."

The smartwatch will go on sale starting at $349 beginning early next year. The company is offering three designs: the stainless-steel-cased Apple Watch, aluminum-cased Apple Watch Sport and 18-karat-gold-cased Apple Watch Edition. The devices must be paired with an iPhone, and are compatible with the iPhone 5, 5C, 5S, 6 and 6 Plus.

In the run-up to Apple's product launch event Tuesday, wearables were perhaps the most anticipated new product category for Apple. The company revolutionized the phone and computing industries with its iPhone and iPad, but people have been waiting for it to do the same thing to another sector. Apple also needs a big new market to help balance out its operations -- nearly three-quarters of Apple's sales come from the iPhone and iPad. Analysts and investors largely don't believe wearables will be as big for Apple as smartphones, but it could open up new ancillary software and services that boost results.

Among its features, the new smartwatch can be used with the tech giant's new Apple Pay mobile-payment system, allowing users to make purchases at a register using the device.

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Apple designed three kinds of Apple Watches, focused on mainstream customers, fitness and high-fashion. Apple

The Apple Watch senses you're raising your wrist and turns on the display, showing a customizable touchscreen watch face that allows the user to navigate a menu of apps. The digital crown on the side allows users to zoom in and out in apps and scroll through options when setting an alarm or another feature, and is used as the home button.

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James Martin/CNET

The display has been laminated to a polished crystal of sapphire, one of the hardest materials on earth that's already used in several luxury watches.

The display senses touch and force, allowing the device to notice the difference between a tap and press. The back has sensors that track a user's pulse rate, helping it provide a broad picture of daily activity. The smartwatch uses a inductive charger that connects magnetically to the back of the device.

Researcher IHS said Tuesday the Apple Watch "stands on the shoulders" of the iPhone, which is already used by hundreds of millions of customers. It said Apple will aim to make the smartwatch a must-have companion for every one of those smartphone owner. "But moving into a new category is a bold, expensive and risky effort," it said.

Nearly all of the company's rivals have targeted the market in an effort to establish a strong foothold ahead of Apple. Mobile device makers including Samsung, LG, and Motorola and Taiwanese PC maker Asus have unveiled smartwatches and fitness bands. Traditional watchmakers, such as Fossil, are getting in on the act. And even Intel, the world's largest maker of computer chips, last week announced a new bejeweled luxury smart bracelet called the MICA that will sell for less than $1,000 later this year.

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Showing off the inductive charging on the Apple Watch. James Martin/CNET

Samsung, locked in ongoing patent disputes against Apple over smartphone and tablet designs, has introduced six smartwatches in the past year to define what the wearable market will be. Its devices include the Gear S smartwatch, which has its own 3G wireless connectivity (so it doesn't have to be paired with a smartphone or tablet); the Gear Fit fitness band; and the Gear Live, which runs Google's new Android Wear software for mobile devices.

Despite the push by tech companies, sales of wearables are believed to be weak. In the US, Europe, China, Japan, and Australia, less than 1 percent -- or 0.81 percent -- of consumers own a smartwatch, according to a study by Kantar Worldpanel ComTech. Of global smartwatch owners, 51 percent have strapped on a Samsung device, 17 percent use Sony, and 6 percent own a Pebble smartwatch, the research firm said.

Apple, who also wasn't first to market with a digital music player, smartphone, or tablet, has an opportunity to do what it's done in the past: come out with an elegant, easy-to-use device that showcases why it's a must-have. That's what its smartwatch rivals, dinged for creating big, clunky, and unappealing designs, have failed to do, proffering nice but not compelling features like fitness tracking and notifications.

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Apple, left, versus Samsung. Connie Guglielmo/CNET

Estimates vary on the potential size of the wearables market, with some analysts predicting it to soar and others forecasting its demise. Market research firm IDC projects that from the end of this year to 2018, wearable shipments will increase nearly sixfold to 111.9 million units. Forrester Research, however, predicts that by 2016 the functionality of smartwatches and fitness bands will be absorbed by other devices such as smartphones and sensor-laden headphones.

As for Apple, Morgan Stanley analyst Katy Huberty estimates the company could ship at least 30 million iWatches in the first 12 months the device is on sale, generating about $9 billion in revenue. It's possible Apple could ship double that amount, she added. By comparison, Apple sold 35.2 million iPhones in the quarter ended this June, helping it generate a total $37.4 billion in fiscal third-quarter revenue.

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