Apple’s iWatch and the Future of Wearable Computers

Anindya is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Apple (NASDAQ: AAPL) is developing an iOS-based wristwatch in its headquarters in Cupertino, California. A team of 100 people is working on the device, reports Bloomberg. The team includes employees from its marketing, software, and hardware units who had previously worked on the iPhone and iPad. The team’s size suggests that Apple is beyond the experimentation phase in its development.

“Like other breakthrough Apple products, its value will be underestimated at launch, and then grow to have a profound impact on our lives and Apple’s fortunes,” Bruce Tognazzini, a technology consultant and former Apple employee, wrote in a blog post.

Wearable Computers and iWatch: Latest Tech Revolution

The introduction of a wearable computing device may signal a new era for the tech industry. Apple’s debut of the iPhone in 2007 and iPad in 2010 created the market for touch-screen smartphones and tablet computers that have been followed by other tech companies.

Hon Hai Precision Industry Company (aka Foxconn), which assembles the iPhone, invested in startup WIMM Labs in 2001, which designed a watch with a screen, Wi-Fi, and Bluetooth. Apple had discussed the manufacturing details of an iWatch with the company. A Chinese gadget site, Tech.163, reported that the company had begun development of a watch featuring Bluetooth and a 1.5-inch display. Apple had also partnered with Intel to develop the wristwatch.

“Apple is already in the wearable space through its ecosystem partners that make accessories that connect to the iPhone,” said Sarah Rotman Epps, a Forrester analyst who specializes in wearable computing, adding, “This makes Apple potentially the biggest player of the wearables market in a sort of invisible way.”

How the iWatch Can Change the World for the Better?

You might be wondering how the iWatch can change the world for the better. It might not matter a lot right now, but it could in the future. If the iWatch becomes popular, it could do a lot to push the concept of wearable computing for consumers.

The iWatch could have an impact for consumers and businesses on the acceptance of wearable computing. This could make a lot of activities much easier for people, especially in brick-and-mortar stores. The iWatch could, as Nigam Arora writes for Forbes, remember all of our passwords and use an NFC chip “to help [you] pay for” anything in a quick and secure way. Imagine simply being able to wave your watch with NFC technology and paying for whatever product you ordered.

Glass That Bends the Rules of Manufacturing

Corning (NYSE: GLW), the maker of the ultra-tough Gorilla Glass that is used in the iPhone, announced last year that it had solved the difficult engineering challenge of creating bendable glass, called Willow Glass, that can flop as easily as a piece of paper in the wind without breaking.

<img src="/media/images/user_14403/corning-willow-glass_large.png" />

Image: Corning’s Willow Glass can wrap around someone’s wrist

“You can certainly make it wrap around a cylindrical object and that could be someone’s wrist,” said Pete Bocko, chief technology officer of Corning. “Right now, if I tried to make something that looked like a watch, that could be done using this flexible glass,” he added. 

In the fourth quarter Apple’s revenue fell short of consensus forecast. In addition, iPhone sales also fell short of expectations, raising worries that the demand for the smartphone is fading. Also, the company's revenue outlook for the current quarter pointed to fading demand for iPhones.

Apple, of course, is a key customer for Corning, and a weak outlook for the iPhone maker did not augur well for the company. Corning revealed its Gorilla Glass 3 in the International Consumer Electronics Show, or CES, in Las Vegas. Gorilla Glass 3 will be hardier than Gorilla Glass 2, which is what's currently being used in iPhones.

Corning's Willow Glass will support thinner backplanes and color filters for both Organic Light Emitting Diodes (OLED) and Liquid Crystal Displays (LCD) in high performance, portable devices such as smart phones, tablets, and notebook computers. This new, ultra-slim flexible glass will also help develop conformable (curved) displays for immersive viewing or mounting on non-flat surfaces. Willow Glass could be immensely profitable for Corning, because it's expected to be widely used in wearable devices.

Google's Glass: Google’s Version of a Wearable Device

Google (NASDAQ: GOOG) is developing its augmented reality Glass, another wearable computing device. Google's Glass will have a display and a camera, situated over the right eye, as well as audio input and output. It will feature a touch pad on the side and multiple sensors. The product can connect to the Internet via Wi-Fi radio and Bluetooth. Google Glass is rumored to be released publicly in 2014.

"Google Glass" is the name of Google’s project to create augmented reality Glasses. The core of augmented reality lies in accessing your computer hands free. People walk on the streets, oblivious to their surroundings, looking down at small, rectangular pieces of glass in their hands. Google's Glass is an improvement over the current situation and will bring these people back to the real world, making them more aware of their surroundings.

The "Google Glass" project is making use of bone conduction technology in order to transmit sound to the wearer of the device and save users from needing headphones. An internal transducer mechanism vibrates bones in the wearer’s head, generating more vibrations in the cochlea (the fluid-filled part of the ear), turning all of these vibrations into what the wearer hears as sound. Google’s Project Glass was filed with the US Federal Communications Commission (FCC) a few days ago.

Why Investors Should Care

  • If smartphones do become smartwatches and smartglasses, Apple and Google seem to have the technology to make standout wearable computers.
  • This technology could progress to a point where consumers have a tablet plus wearable computers, like watches or glasses, which enable simple things like voice calls, texting, quick searches, and navigation.
  • These devices are likely to be cheap down the line and can be sold in emerging markets as well as developed markets.
  • By manufacturing wearable computers, Apple and Google could generate huge revenue and returns for shareholders.

The Bottom Line

There is a history of evolution in computing and communication technology. In the continuum of communication techniques, which currently begins with speech and ends with tablets and smartphones, Apple's iWatch and Google's Glass will be the next round of innovations. 

Anindya7 has no position in any stocks mentioned. The Motley Fool recommends Apple, Corning, and Google. The Motley Fool owns shares of Apple, Corning, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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