For Samsung, Smartwatch’s Timing Counts

September 2, 2013, 7:06 p.m. ET

For Samsung, Smartwatch’s Timing Counts


SEOUL—After months of buzz,Samsung Electronics Co.005930.SE -0.59% will take center stage in Berlin to showcase its new smartwatch, a device that will bring some of the functions of a smartphone to your wrist. All eyes will be on the “Galaxy Gear” as a test of whether the South Korean company can innovate in the mobile industry. The company has been locking horns with Apple Inc. AAPL -0.91% in courts around the globe since 2011, after Apple accused Samsung of copying the design and feel of its smartphone and tablet. This time, Samsung is beating its rival to the punch in the realm of so-called wearable devices, considered by many to be a promising new frontier in consumer electronics.This isn’t the company’s first attempt at creating a watch-phone, but it is expected to be Samsung’s first wristwatch that is powered by Google Inc.’s GOOG -1.00%Android operating system. The device is expected to allow users to check their emails, listen to music and take photos, though it is likely to be marketed as a complementary device to its Galaxy smartphones rather than a stand-alone product.

The Galaxy Gear’s announcement is timed to coincide with the start of the consumer electronics show IFA, which begins on Thursday in Berlin. A person familiar with the matter said the device will go on sale later this year.

The big question for those tracking the technology industry is just how smart this device will be. Samsung’s speedy entry to the market comes ahead of an expected announcement by Apple, which is also developing a watch-like device, according to people familiar with the situation. The fact that Samsung, hot off its recent rise to smartphone dominance, is also jumping into the smartwatch fray has helped build anticipation—but it has also raised doubts about just how much the vaunted device will be able to do.

The South Korean giant has dialed down some of the more optimistic expectations—that the device would have a flexible display, for instance, allowing it to conform to the curvature of the human wrist. That could come in a future generation of smartwatches. In May, Samsung had filed a patent registration with Korean authorities hinting at such a design.

More likely, the smartwatch—at least initially—isn’t going to look too different from a device that Sony Corp., 6758.TO +2.93% the Japanese tech powerhouse, quietly released in June. That modest device, simply called the SmartWatch, connects with Android-based smartphones via Bluetooth wireless technology, allowing users to receive email and phone-call notifications on their wrist—a sort of remote control for those too lazy to reach into their pockets or purses.

If Samsung’s smartwatch is anything like Sony’s, as Seo Won-seok, an analyst with Korea Investment & Securities, suspects, “it would be more for exhibition purposes—to show that Samsung is a technology leader.”

Samsung plans to unveil its third-generation Galaxy Note phablet—a cross over between a smartphone and a tablet—at IFA, alongside the smartwatch.

The Galaxy Note has been one of Samsung’s best-selling smartphones, powering the company’s net profit to another record high in the most recent quarter, though earnings momentum has shown signs of slowing, due to high marketing costs.

The new version of the Note will test whether Samsung’s strategy of launching multiple products in different sizes—a move that has allowed the company to leapfrog Apple last year to become the world’s biggest smartphone maker—continues to bear fruit. Based on data from IDC, Samsung’s smartphone market share in the second quarter was 30.4% ahead of Apple’s 13.1%.

The pre-release hype for the Galaxy Gear smartwatch also reflects Samsung’s aggressiveness in marketing its products. Samsung has been throwing lavish launch events in various locations every couple of months, starting with the Galaxy S4 launch event in New York in March.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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