Preston Gralla: Microsoft's smartwatch: Been there, didn't do that

Apple, Google and Samsung are all said to be working on smartwatches. This is shaping up as yet one more example of Microsoft getting to a market first and then failing to cash in.

Various reports say Apple is working on what would presumably be called the iWatch. Because we're talking about Apple, there has been no confirmation of those reports, but as many as 100 product designers are said to be hard at work on it. Google's Android division may also be working on a smartwatch. Its offering, sources say, would work not only with Android smartphones and tablets, but with Google Glass as well. And Samsung has confirmed that it's working on a smartwatch.

With so much activity focusing on the intersection of technology and the human wrist, Microsoft is paying attention and is said to be making its own moves toward developing a smartwatch. But in Microsoft's case, that should read "developing a smartwatch again." That's because Microsoft pioneered smartwatches years ago, and then abandoned the concept.

Nearly two decades ago, in 1995, Microsoft and Timex co-developed the Timex Data Link watch, which wirelessly downloaded and displayed data from Windows-based PCs. Though worn by both astronauts and cosmonauts on space missions and given Popular Science's Best of What's New Award and the Popular Mechanics 1995 Design and Engineering Award, it never made a dent in the market, and Timex and Microsoft abandoned it. Then in 2003, Microsoft launched its Smart Watch, which delivered news, weather, traffic information and more over FM frequencies. The Smart Watch was based on Microsoft's Smart Personal Objects Technology (SPOT), which was meant to be applied to an entire fleet of gadgets, from coffee makers to GPS devices.

That never happened. The watches were bulky and expensive (one model sold for $800), and the SPOT service required a $59 annual subscription. In 2008, Microsoft stopped selling the watches, while still supporting transmissions to existing ones. At the end of 2011, it pulled the plug entirely.

Now, in 2013, Microsoft finds itself not at the vanguard of a burgeoning trend, but playing catch-up. The Wall Street Journal says Microsoft has contacted parts suppliers in Asia to ship components for a smartwatch. No doubt the company has seen Gartner's estimate that the wearable electronics market will reach $10 billion by 2016.

Why is Microsoft following and not leading? One reason is that there's a disconnect between its substantial research capabilities and its product development efforts. Microsoft far outspends Apple and Google on research and development -- its $9.4 billion budget is nearly double Google's $5.2 billion and more than triple Apple's $2.6 billion, according to S&P Capital IQ -- and it has been the company with the world's largest R&D budget for the past 12 months. Clearly, Apple gets a far bigger bang for its buck when it comes to matching research to product development.

Another problem is Microsoft's protect-your-own-turf culture, which makes it difficult for it to develop products that span departments. And it doesn't help that Microsoft demands that all its products lead back to Windows. That bit of turf-guarding holds back innovation.

This all reminds me of what happened with smartphones and tablets. In both cases, Microsoft had the jump on Apple but couldn't cash in. It's hard to believe that things will be different this time.

Preston Gralla is a Computerworld.com contributing editor and the author of more than 35 books, including How the Internet Works (Que, 2006).

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