McIntyre summarized the challenges this way: "If a company could get the homerun design -- one that's right -- with more apps and good price points, they could take off, but we haven't seen that design and that solution yet."
Newcomers to the market
The latest smartwatches to become available include Samsung's $300 Galaxy Gear. The Galaxy Gear, launched in the fall, is designed to pair with Galaxy devices like the Note 3 plus-size phone to make phone calls, take pictures, download apps, conduct Web searches or check email.
The Sony Smartwatch, now in its second generation sells for $200, but cannot make voice calls.
Samsung and eBay recently announced that Galaxy Gear can now notify users of responses to online eBay bids, giving users the ability to make a quick counter-bid. But that kind of app isn't sufficient to justify the cost of a device that largely relies on smartphones to make calls or the smartphone's cellular or Wi-Fi connection to the Internet.
Innovation coming?
Officials at Samsung and elsewhere acknowledge that wearable technology, especially smartwatches, is barely beyond infancy and will likely see substantial innovation in the next two years.
Perhaps Apple will wow consumers globally with an "iWatch" by including technologies like the iBeacon proximity tool that was added to recent iPhone models. The innovative iPod and iPhone turned the consumer electronics market upside down, and Apple could do that again with a smartwatch.
Unfortunately, Apple doesn't exhibit at CES, and the company has yet to officially disclose that it's developing an iWatch smartwatch.
That said, an iWatch with iBeacon technology could usher in a Apple smartwatch world where users could literally open doors equipped with their own transmitters. For instance, a driver could unlock his or her car and start it with such technology. Users could also use the technology make purchases in a store after receiving a discount coupon by authorizing a credit card payment through a previously-stored account with Apple.
Future smartwatches may also include voice and gesture activation capabilities, which would go a long way towards reducing the need for a large touchscreen interface. Voice or gesture control makes it more likely that we'll see an elegant-looking smartwatch with a much smaller face that still has powerful functionality.
Market potential for smartwatches
Estimates of the potential market for smartwatches vary.
Analysts at Canalys back in July projected that 5 million smartwatches will ship worldwide in 2014, while Gartner recently said it projects that the global number could reach 7 million next year.
Both the Canalys and Gartner projections are tiny compared to the forecasts that 1 billion or more smartphones will ship in 2014. However, the 2014 smartphone projections are both substantially higher than Canalys' report showing that 500,000 would be shipped this year.
What will work?
Canalys analyst Daniel Matte singled out the $150 smartwatch made by the startup Pebble. That company was started with funding from 85,000 investors found through Kickstarter.
