Tag Heuer launches $1,500 smartwatch, but time will tell its impact

High-priced smartwatches are a niche market, but a killer messaging app might boost the overall category

Swiss watchmaker Tag Heuer on Monday launched a $1,500 smartwatch that is built on Android Wear and runs an Intel Atom processor.

The round-faced Tag Heuer Connected watch has a touchscreen with traditional digital watch hands and a titanium case that is 46 mm (1 13/16 inches) in diameter. It comes with a rubber wrist strap that's available in seven colors.

With Android Wear, users can connect to 4,000 apps. Android Wear devices can also pair with Apple iPhones, in a feature Google announced Aug. 31. The Android Wear for iOS app also works with other more affordable Android Wear watches, such as the recently announced Huawei Watch, the Asus ZenWatch 2 and four new Moto 360 models.

The big question with the new Tag Heuer Connected is whether it can make a significant impact in the overall smartwatch market with its $1,500 price tag.

tag heuer smartwatch carrera Tag Heuer

The Tag Heuer Carrera Connected smartwatch was launched Nov. 9.

"There's a rather limited market for high-priced smartwatches, at least for now," said Ramon Llamas, an analyst at IDC, in an interview. Apple's Edition Watch sells for $10,000 and up, he noted.

"You can get the same Android Wear experience for a lot cheaper, with the Moto 360 costing less than a third of the new Tag Heuer smartwatch. So the appeal with Tag Heuer is going to be on fashion and aesthetics," he added.

It's hard to imagine the Tag Heuer Connected will ever catch on in the enterprise space, except perhaps when given as a prize to a top salesman, IDC analyst Jitesh Ubrani said.

Even if the Connected smartwatch only attracts a small consumer following, it will be important for Tag Heuer, Google and Intel, especially.

Tag Heuer wants to move beyond the traditional, and fading, watch market. Intel, meanwhile, "wants to do well in wearables, since Intel was late to the mobile transformation," Ubrani said. "Simply because of the $1,500 price point, the Connected has limited appeal, but it helps raise the profile of the development partners."

Ubrani said a number of product makers have traditionally partnered on high-priced "aspirational" products to raise their corporate profile. "Even if everybody can't afford that high-priced model, they may buy another like it that costs a little less," he said.

"To move the needle for growth in the smartwatch market, it's more up to Google and Intel than Tag Heuer," Ubrani added.

Could smartwatches end up like tablets?

Tag Heuer's entry into smartwatches also brings up the question of where the overall smartwatch market is headed. One concern: Could smartwatches end up being a multi-year fad, like tablets or netbooks, with a spike in the first few years, followed by a decline?

"Smartwatches are still a product under development and not the be-all and end-all," Llamas said. "There's still a lot of room for smartwatch growth, even if there's the threat of it being a niche market."

IDC in September forecast that 23.8 million smartwatches would ship in 2015, and would more than triple to 85 million by 2019. Over that period, Apple's WatchOS will control about half of the market, with Android Wear increasing from about 17% in 2015 to 38% in 2019. Compared to smartphones, which will ship 1.4 billion units in 2015, smartwatches are relatively insignificant, but they are still shipping "in the millions," Llamas noted.

"We're still at the early stages of the smartwatch market," Ubrani added.

What about the smartwatch killer app?

For smartwatches to catch on in a bigger way, they will need killer apps — compelling apps that users will associate as especially valuable with the small wristworn devices.

Killer apps for smartwatches could turn out to be short messaging apps, made possible with a small, wearable form factor that is easier to access than, say, a smartphone, Ubrani said.

By messaging, Ubrani was referring to the ability to draw on the touchscreen of a smartwatch and send that drawing or emoji to another person wirelessly.

Google in April launched the Google Handwriting Input app for texting and creating emojis on Android OS devices. In May, Google announced at Google I/O that Android Wear would also support drawing and sending emojis, like a smiley face, from an Android Wear smartwatch. Android Wear sends the emoji as a refined drawing to the recipient. By comparison, with the Watch OS, users can send small drawings in their original form.

Ubrani said the future of the smartwatch will depend heavily on developers finding and creating killer apps and services. "The smartphone-on-a-wrist won't happen," Ubrani predicted. "Developers have to find the right apps and use-case scenario. Our types of interactions via smartwatches will change. Messaging will be big."

For now, the ability to text via a smartwatch will be primarily through voice input to the smartwatch, which is then converted to text, with the Bluetooth-connected smartphone probably making that voice-to-text conversion.

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