Samsung – Slippery Mud.

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The Galaxy Gear is unlikely to stick.   

  • Samsung is looking for other avenues of growth and in that vein I suspect that the Galaxy Gear is merely an experiment.
  • Samsung launched three products at its event at the IFA trade show: Galaxy Gear smart watch, Galaxy Tab 10.1 2014 and the Galaxy Note 3.
  • The Galaxy Tab 10.1 and Galaxy Note 3 are both solid updates to the predecessors and I expect that they will continue to fare well.
  • The Galaxy Tab 10.1 features a “super clear” LCD with a 2560 x 1600 display, 2.3Ghz processor and Android 4.3.
  • The Galaxy Note 3 increases the screen size to 5.7 inches with full HD at 1920 x 1080, a larger battery as well as a large redesign around the S-Pen and its functionality.
  • Both of these devices feature ergonomic improvements by which the back of the device is made of faux leather (including stitching) making it easier to hold but losing the premium metal feel.
  • The real interest surrounded Samsung’s first foray into the world of wearables with the launch of the Galaxy Gear.
  • This is an ugly and chunky Android device with a 800Mhz processor that I think almost everyone outside of the uber-geeks will be ashamed to wear.
  • It has a 320 x 320 AMOLED display and is launching with 70 applications that are focused around activity and fitness.
  • The Galaxy Gear appears to be running a customised version of Android to which, I suspect, Google has no access.
  • This is a sign of things to come and over the next 5 years, I think that Samsung will increasingly look to edge Google out of its products leaving the eco-system opportunity available for Samsung rather than Google (see here).
  • The Gear’s shortcomings reveal that this is just an experiment.
  • Samsung is throwing mud at the wall to see what sticks.
  • Because the Galaxy Gear ignores many of the critical requirements for a watch (fashion and brand), I think that very few people will buy it.
  • Furthermore, it is not much more than a remote control for one’s smartphone and that instance it does not offer users a reason to get excited.
  • I am curious to see if Apple can do any better when it comes to coming up with a must-have use for one of these devices.
  • As it stands today, this is a segment in its infancy and what is out there at the moment just does not cut it.
  • I need to see a unique use case and a strong element of desirability in a device such as this to compete in the timepiece industry which is driven by brand and fashion.
  • I would not abandon a Casio to wear one of these let alone a Panerai or a Rolex.

 

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.