Smartwatches From Samsung and Other Big Names Are Coming. Does That Matter?

We’ve heard rumors about smartwatches from the likes of Apple (AAPL) and Samsung (005930:KS) for most of 2013, and it sounds like they’re finally almost here. Bloomberg News reported today that on Sept. 4, Samsung will introduce the Galaxy Gear, a wristwatch-like device that can be used for phone calls, surfing the Web, and handling e-mail. Apple is trying to get its own smartwatch on shelves by the end of the year, according to the report.

The Galaxy Gear won’t be the first smartwatch to hit the market: A number of smaller companies have released devices, most notably the Kickstarter darling Pebble. But Samsung’s launch signals the arrival of the heavy hitters (Sony (SNE) doesn’t count). Still, it remains an open question whether these kinds of products are really going to matter. Here are some of the most important factors:
Are companies really committed to these things?
 Gadget makers have largely tapped out the high-end smartphone market in the U.S., and an entirely new product category could be a huge boon. The same goes for iLife-style product integration: If Samsung’s smartwatch really catches on before Apple has a chance to compete, that can also mean an advantage for the Korean company’s tablets and phones—maybe even televisions and refrigerators.
Of course, no one feels the need for a smartwatch yet, but we might feel differently once Samsung and Apple’s marketing teams are done with us. In 2012, Apple spent $1 billion on advertising, while Samsung spent $4 billion. Once you consider Samsung’s marketing, advertising, and promotional expenses, you’ve reached an $11 billion publicity budget. If both companies start putting their full weight behind these things, they’ll give the devices a much better chance to succeed.
What do they do?
That success will still turn, though, on whether smartwatches are actually good for much. While there’s a $60 billion worldwide market for watches, many smartphone users have been content to abandon wrist-mounted technology in favor of the digital age’s equivalent of the pocket watch. Tech companies argue that people would gladly pay for a device that keeps them from having to pull their phones out for every little thing, but it’s unclear which features Samsung will be able to include on a watch.
Another big question will be how smartwatches go beyond basic functions. Most models so far are largely relays for phone functions and offer relatively little as standalone gadgets. Galaxy Gear, according to the Bloomberg News report, is going to run a version of Android, but how apps will work on the new device is a mystery. Given the success of wearable fitness devices like Nike’s (NKE) Fuelband, it will likely have some self-tracking functionality. Let’s see what else it can do.