What it is: Android Wear is the smartwatch version of the Android operating system, which is free for manufacturers to use to create smartwatches.
Before Apple introduced the Apple Watch, many companies had already been selling wearable computers such as fitness bands or smartwatches. Even more companies immediately offered their version of wearable computers shortly after the Apple Watch arrived. Putting together the hardware of a smart watch is fairly easy. The hard part is the software, so most manufacturers simply take the easy way out and use Android Wear, which is the Android smartwatch operating system.
There’s nothing wrong with Android Wear. The big problem is to look at the market for Android smartphones and tablets. Apple commands 94% of the smartphone profits by selling premium smartphones. Beyond Samsung, most Android smartphone and tablet manufacturers are losing money selling Android devices, and even Samsung’s profits are steadily dropping as they’re facing competition from the iPhone/iPad on the high-end and lower cost Android devices from companies such as Huawei on the low-end. That leaves little room left for Samsung to make a profit, which explains why their profits are steadily declining each quarter.
The problem with Android in the smartphone and tablet market is that they’re commodities. The difference between a Samsung and an LG Android smartphone or tablet is minimal. After all, if both are running Android, there’s little difference the hardware can make.
The end result is that most Android manufacturers are competing, not against the iPhone/iPad, but against each other in a race to the bottom to lower prices in a desperate attempt to attract more customers and make up for profits with volume. The problem with this strategy is that it’s never a long-term path to success.
Now with smartwatch manufacturers relying on Android Wear, the same result will likely occur. What’s the difference between an Android smartwatch from Samsung compared to a similar Android smartwatch from a luxury brand like Michael Kors? The software is the same, so the hardware is the only difference. Yet if people want to spend a large amount of money on a smartwatch, the majority will opt for an Apple Watch, which leaves few customers for multiple Android manufacturers to chase — just like in the smartphone market.
While luxury brands like Michael Kors enter the smartwatch market, they’ll be competing with the Apple Watch on the high-end and other Android Wear manufacturers on the low-end. Just ask Samsung how profitable that strategy can be as witnessed by their declining smartphone profits.
Watches as luxury items since few people need a watch to tell time. yet when most people think of luxury items, they think of Apple, not Android. If Apple has captured 94% of the smartphone market, imagine how large a percentage they’ll capture of the smartwatch market. Android Wear may be successful in getting more devices in the market, but in terms of profit, Apple will likely retain the lion’s share of the money. Any smartwatch company in the market to make money (all of them) needs to look at the Android market carefully to decide if they want to repeat the disaster that Android smartphone manufacturers face.
To read more about Android Wear manufacturers’ latest releases, click here.