Market Insight

With Android Wear, Google kickstarts its wearable portfolio using its smartphone developer base

March 20, 2014

Shane Walker Shane Walker Principal Analyst, Medical Technology

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Android Wear is a major expansion of Google's wearable strategy:

  • This is a new version of Android, initially optimized for smartwatches.
  • LG and Motorola will be among the first companies to make Android Wear smartwatches.
  • Google has released a free Android Wear software development kit (SDK) aiming to attract existing Android smartphone developers to extend their apps with Android Wear features.
  • Demonstrated features in Android Wear include: maps, navigation, Google Now content, search, messaging, smartphone notifications, and health & fitness.
  • The initial approach uses a notifications-style approach similar to most Google Glass apps. For now, there is little coordination between the Google Glass development experience and apps, and those for Android Wear.
  • Hardware requirements are similar to low end smartphones: 4GB storage and 512MB Ram.
  • Qualcomm are working with Google to optimize Snapdragon support for Android Wear.

Our take:

Google correctly understands smart wearables require apps, content and services to deliver on the promise of a smart device. Consumers will not buy smartwatches to tell the time any more than consumers today buy smartphones just to make phone calls. By seeding the app development kit now, Google hopes to have a rich range of apps and services available by the time the first devices ship in the second quarter of 2014.

With Android Wear, Google correctly offers a broad range of features. Consumers will not wear multiple smartwatches, one to act as an end point for smartphone notifications, another for maps, and a third for health and fitness.

Instead, a smartwatch platform must be able to do everything a consumer needs from a wrist-worn device. IHS tracks wearable and smart accessory apps by category: While health fitness is the largest category today, it represents just 28% of overall smart accessory apps. Other important categories include media playback control, imaging, games, and sport. Android Wear supports all of these types of apps.

By focusing on a notifications-based app experience for now, Google is making it easy for app developers to extend support for Android Wear devices with little risk of causing app instability on version one Android Wear smartwatches.

This is the identical strategy that Google took with the initial Google Glass app development kit released in the middle on 2013. Because apps run on a wirelessly tethered smartphone, there is minimal impact on smartwatch battery performance or stability.

Over time, IHS expects Google to extend app capabilities to enable apps to run directly on smartwatch hardware too, following the same evolution path as Google Glass apps. Also, Google will build linkages with different classes of wearable device to encourage developers to support Google Glass alongside smartwatches and other wearables. This version of Android Wear is just a start.

Shrewdly, Google is including Google Now as a key part of its wearable content and services. Unlike other wearable device makers, Google is able to leverage its extensive search capabilities which already provides bite-sized contextual content to Android smartphone owners.

This content is ideal to deliver the same glanceable experence on wearables. Google Now provides Google with competitive advantage compared with smaller proprietary wearable makers such as Pebble or Meta, and also to Samsung's Tizen-based Gear range. This requirement explains Apple's pursuit of search and voice control with Siri and its various maps-based acquisitions.

IHS believes Android Wear is a major initiative that will make it easier for more companies to enter the wearable market. But the market is still immature and there is uncertainty over Google's monetization strategy. Should Google attempt to extend its advertising-led business model into wearables, it risks increasing consumer alienation. If it does not, it needs a new business model to support its investment in this new version of the open source Android operating system. One longer term option would be for Google to become a trusted cloud store for personal data collected from wearables that could be shared with health providers. For now, uncertainty over Google makes it hard for potential Android Wear partners to plan their product strategies.

Those looking to profit in this evolving mobile device category must take the long view. This will be challenging for the smaller companies already in the wearable market that need to make profits. Now they face much increased competition from large smartphone vendors able to cross-subsidize their wearable strategy. These smaller wearable device makers must decide whether to pursue their existing proprietary software and apps, focus on a different niche, seek an acquirer now, or jump on board with the Google Android Wear goliath and go head to head with the large smartphone makers entering their market.

The larger smartphone companies can afford to take this longer term view. But they must still think hard how to differentiate their products which may prove hard given common usage of Android Wear software across multiple manufacturers. And, even more importantly how to tie their wearable devices, into their overall mobile product portfolio strategy to drive a return.

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