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A worker climbs outside an Apple store in Hong Kong, April 10, 2013. The company whose smartphones gave millions of consumers a reason to ditch their wristwatches might be getting into the wristwatch business. Speculation is mounting after reports that Apple Inc. has applied for a trademark on the term “iWatch” in Japan, leading some to conclude the company behind the iPhone will soon release a smartwatch. (BOBBY YIP/REUTERS)
A worker climbs outside an Apple store in Hong Kong, April 10, 2013. The company whose smartphones gave millions of consumers a reason to ditch their wristwatches might be getting into the wristwatch business. Speculation is mounting after reports that Apple Inc. has applied for a trademark on the term “iWatch” in Japan, leading some to conclude the company behind the iPhone will soon release a smartwatch. (BOBBY YIP/REUTERS)

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Speculation mounts on Apple iWatch Add to ...

The company whose smartphones gave millions of consumers a reason to ditch their wristwatches might be getting into the wristwatch business.

Speculation is mounting after reports that Apple Inc. has applied for a trademark on the term “iWatch” in Japan, leading some to conclude the company behind the iPhone will soon release a smartwatch. The report comes as similar speculation surrounds many of the big players in the mobile hardware industry, including Google and Samsung.

In general terms, a smartwatch is one that features much of the same technology found in a smartphone or tablet, such as Wi-Fi connectivity, software applications and the ability to synchronize with other devices. Smartwatches are also part of a wider trend of so-called “wearable computing,” which includes everything from wristbands that monitor a user's activity levels, to the Google Glass project.

Neither Apple nor Google have said anything publicly about smartwatch plans (Samsung has all but confirmed it is working on one), but analysts and observers have speculated for months that such devices are on the way. RBC Dominion Securities analyst Amit Daryanani, for example, has previously predicted that Apple may release the so-called iWatch in the second half of this year, as investors ramp up pressure on the company to produce a truly new piece of hardware, as opposed to improved versions of existing products.

For Apple, the iWatch is perhaps the least painful way to give its customers and investors hardware innovation without straying too far from the company's iconic line of smartphones and tablets. Should Apple release a smartwatch, the device would likely contain many of the design and technology features found in the iPhone and iPad, and would probably run on a modified version of the iOS operating system (just as any similar device from Google will almost certainly make use of the company's Android operating system).

In many ways, the current smartwatch industry resembles the state of the MP3-player industry just before Apple introduced the iPod in 2001. Several smaller companies have already developed smartwatches that run small-scale software applications and can be synchronized with a user's smartphone. Sony already offers a device that can communicate with Android-based smartphones, and the Pebble smartwatch, developed by a tiny startup last year, quickly became one of the largest crowdfunding projects of all time, after thousands of users expressed interest in the device. Still, the devices themselves are far from ubiquitous, giving major players such as Google and Apple a chance to swoop in.

But for all the hype around smartwatches, the product category is still subject to deep uncertainty. Many smartphone users stopped wearing wristwatches altogether, opting to check the time on their phones instead. The smartphone's usability as an advertising tool is also likely minimal, given that smartphone advertising is itself a difficult industry because of the smartphone's relatively small screen, and a smartwatch screen is likely to be even smaller.

For companies such as Apple and Samsung, a smartwatch that mimics too many of the features of smartphones could end up cannibalizing sales of those devices. But should the manufacturers take the opposite approach and release a device with far fewer features, pricing would become a key determinant of consumer interest. Currently, the Pebble smartwatch is available for pre-order at $150 (U.S.), and customers are likely to balk at an offering from one of the large manufacturers that offers similar features for a significantly higher price.

But somewhere between those two extremes, there is a potential sweet spot for the smartwatch industry's newest entrants. A reasonably priced smartwatch could appeal to consumers looking for a remote control for their smartphones – allowing them to read text messages or select music tracks without taking their phone out of their pocket. A smartwatch that detects wrist movement can also function as a health monitor, making auxiliary devices such as the FitBit and the Nike Fuelband unnecessary.

The good news for Apple fans is that the wait for an iWatch – if the device does exist – is likely to be a short one. The company is widely expected to release a number of new products, including a new iPhone, before the end of the year. Unlike Apple's experience in the tablet and smartphone markets, however, the company is unlikely to enjoy years of dominance before Google, Samsung and other major competitors enter the market.

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