The launch comes at a critical time for the South Korean company. There’s no doubt that Samsung’s mobile communications unit has been on an incredible growth spurt over the past few years. Worldwide, according to the analysis firm IDC, the company commands a 30 percent share of the smartphone market, compared with the 13 percent claimed by its chief rival, Apple.
But even at the top of industry, the company is facing the same problems that plague all smartphone makers as market shifts eat into profits. In July, Samsung showed slower-than-expected profit growth, which analysts said is probably because more advanced smartphone markets such as the United States are becoming saturated.
That, in turn, makes it harder to sell the most expensive, and profitable, phones, because the cool factor alone may not be enough to woo customers. Samsung has weathered this trend by using its manufacturing expertise — the conglomerate makes everything from dryers to computer chips — to produce a range of smartphones and tablets to appeal to multiple price points.
But it’s also spurred the company to focus on developing the “next big thing,” a phrase Samsung has adopted as its promotional tagline.
To that end, Samsung is placing a bet on a new product category: wearable technology. There’s certainly potential for wearables, which have already caught on in the form of fitness trackers such as the Nike FuelBand. Analysts have predicted that wearables could sell as many as 9.6 million units worldwide by the end of 2016. Qualcomm announced Wednesday that it will release its own smartwatch later this year.
Stepping into the world of wearables not only gives Samsung the chance to appear on the cutting edge, it will also let it create a brand ecosystem of devices that could help it gain a loyal following like the one that has madeApple so successful.
The smartwatch will work in concert with users’ smartphones. Swiping horizontally takes users between features, such as notifications of updates from your social network or e-mail alerts.
Galaxy Gear users also will be able to accept phone calls on the watch, answering calls by putting their wrist next to their heads. There are speakers and a microphone in the clasp area of the watch. Gear also responds to voice commands, so users don’t always have to physically fiddle with the watch while placing calls.
The watch also has a camera that captures short video clips — visual memos, the company is calling it — as well as photographs. This, Samsung argues, will allow people to capture more spontaneous moments.
The smartwatch will also be able to translate signs in foreign languages simply by analyzing a picture. The Gear will also support its own apps, which have been specifically designed for the watch.
If the device catches buyers’ attentions, that means more sales for Samsung, which is marketing its watch and phone together.
The watch will go on sale in October. It will cost $299, numerous media reports said, but a Samsung spokeswoman said in an e-mail that the company has not confirmed pricing.
The high price point may be a stumbling block for consumers who may balk at buying a watch that costs as much as a smartphone, said Brian Proffitt, an adjunct instructor at the University of Notre Dame’s Mendoza School of Business.
But there’s a lot of potential in the market going forward, he said. “It’ll be the usual cycle of adoption,” Proffitt said. “The super geeks will come out and pick these things up . . . and if they start to generate that marketing and sales buzz, others will come out with cheaper models.”
Initial moves into the wearables space, such as Samsung’s watch or Google’s connected Glass headset, are likely to be used as accessories rather than stand-alone devices, said Gartner analyst Angela McIntyre.
“They’ll have value as a secondary display to a smartphone,” she said. “The convenience of having something on your wrist is quite valuable and less distracting, for example, if you’re in conversation with somebody.”
While doubts linger about whether Samsung’s device is the one that will prompt a wearable boom, the firm’s willingness to move into more niche markets has thrown up unexpected successes in the past.
A prime example is the Galaxy Note line of smartphones, which sport screens five inches and up, walking the line between a phone and tablet. The device’s large screen and stylus caused some skepticism, but the Note line has sold more than 10 million units worldwide and found particular success in Asia and other growing smartphone markets, where users see the price appeal of combining the two devices.
Samsung unveiled its third version of the Note on Wednesday.
The Note smartphone — well, really a phablet — is “slimmer, lighter and more powerful” than its predecessors, said Shin, the co-chief executive of Samsung Electronics. It also has the Note line’s biggest screen to date: a pocket-stretching 5.7 inches.
For consumers, the company has also focused carefully on how the phone feels — substantial without being too heavy, Shin said. “We’ve really focused on how the Galaxy Note 3 feels in your hand,” he told the crowd.