With Gear S watch, Samsung tinkers -- and tempts fate

Samsung's latest smartwatch can make calls and work independently of a smartphone. But is that what consumers really want?

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Samsung's Gear S includes a curved Super AMOLED display and 3G connectivity. Samsung

Samsung is showing that it's serious about smartwatches. But are consumers taking it seriously?

Late Wednesday, Samsung unveiled the Gear S, its sixth smartwatch launch in the past year. This device is the first in Samsung's lineup to include a 3G cellular radio, which allows you to make calls, receive notifications, and check emails when not tethered to a smartphone. It also includes a 2-inch curved Super AMOLED display, more enhanced sensors for health tracking, and built-in GPS, plus Samsung's home-grown Tizen operating system.

Samsung co-CEO and head of mobile JK Shin said in a statement that the Gear S "redefines the idea of the smart wearable and the culture of communication. It will let consumers live a truly connected life anywhere, anytime."

For Samsung, the Gear S represents another stake in the ground in the wearables market. With an aggressive portfolio of smartwatches in the market, Samsung is an undisputed leader in the category, even if consumers have been reluctant to buy into a hoped-for fashion trend. It isn't alone in its interest; LG unveiled a new circular watch of its own late Wednesday, and Apple will reportedly unveil a wearable at its iPhone 6 launch event, expected to take place on Sept. 9.

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The G Watch R from LG is a more fashionable take on the smartwatch. LG

Samsung was one of the first companies to release a full-fledged smartwatch that can receive notifications, track steps and heart rate, and perform other functions. And it's also one of the first to introduce a modern smartwatch with a modem inside (its so-called "watch phone" from 1999 doesn't really count). The question is whether anyone really needs -- or even wants -- a smartwatch with cellular connectivity.

"This feels more like throwing stuff at the wall to see if it sticks," JackDaw Research analyst Jan Dawson said. "There haven't been many 3G/4G watches so far, so it's hard to say for sure whether people want one, but the fact is that a device this size can't replace a smartphone. ... I doubt this will make much of a dent in the overall market."

While many companies are getting into wearables, it's unclear just how much consumers want the devices at all, let alone models with a cellular modem. Some analysts expect the wearables market to soar over the next few years, but others are already forecasting its demise. Market research IDC projects that from the end of this year to 2018, wearable shipments will increase nearly sixfold to 111.9 million. 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.

Samsung is betting on wearables soaring. Its willingness to launch multiple variants is similar to its smartphone strategy going back to 2010, when it launched its first Galaxy S smartphone. At the time, Samsung was willing to make multiple variants of the device to suit the needs of the carriers, and experimented with different designs such as a slide-out keyboard.

Little by little, Samsung improved upon its smartphone lineup until it arrived at the breakout hit Galaxy S3. The company is hoping history repeats itself with its Gear line of smartwatches. One difference: consumers were already crazy about smartphones when Samsung appeared on the scene with the original Galaxy S; smartwatches have so far elicited lukewarm responses.

Your watch on a data plan?

The Gear S watch represents another incremental step forward for Samsung, and shores up the disadvantage of needing to link to a smartphone to receive and respond to notifications or perform most basic functions.

Not having to be connected to a smartphone all the time would be handy in certain situations, such as going for a run or a hike without having to take a phone. Users could answer calls directly on their wrists or see new emails has arrived, even if their smartphones are out of range.

But the drawbacks of cellular in wearables may outweigh the benefits, at least right now. Users will have to have data plans for the watches -- unless Samsung has struck some deal with the carriers.

Under Verizon's current "More Everything Plan," users pay a monthly line access fee for each device. Smartphones cost $40 per month, while tablets run $10, connected devices such as cameras cost $5, and Internet devices such as USB modems add $20. At AT&T, the country's second largest carrier after Verizon, the company's "Mobile Share Plan" includes access fees of $40 per month for each smartphone; $10 per month for tablets, cameras, gaming devices, and smart locators; and $20 per month for each Internet device.

A smartwatch likely would fall under the "connected devices" category that adds the lowest cost, but Samsung didn't specify plans for the device. A Samsung spokeswoman declined to comment on the potential data pricing and whether it would hit any US carriers.

Another drawback is that including cellular in the device will drain the battery faster. And then there's the question of whether people would really leave their smartphones behind, particularly when they're doing more with those devices and sometimes even replacing their tablets with bigger-screen phones.

"Given I am not sure people are ready to give up their phones yet, what is the advantage of replicating what you already have in your pocket?" Kantar Worldpanel analyst Carolina Milanesi said.

Adding a 3G chip to a smartwatch could also increase the cost of the device above the $300 Gear 2, which Samsung released in April. Samsung hasn't yet released pricing information on the product, which will sell in October.

It's similar to the buying patterns with tablets. Very few tablets sold today contain 3G or 4G connectivity, Milanesi said. Instead, most people tend to use them at home or other places where they have Wi-Fi, saving themselves the approximate $100-plus markup for the modem. The iPad Air, for instance, starts at $499 for the Wi-Fi model, but the price jumps to $629 to add cellular.

If carriers such as Verizon Wireless and AT&T allow users to apply the same number and share their data plan for the phone and the watch -- without paying the extra fees associated with that -- it could help adoption of the Gear S.

"But considering their track record when it comes to enabling multidevice usage, I would not hold my breath," Milanesi said.

Samsung may use the Gear S as another example of the company's willingness to tinker, but it might be smarter to consider what consumers really need in a wearable. So far, it doesn't look like Samsung's quite nailed it.

Updated at 6:56 a.m. PT: To include a response from Samsung.

 

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