Prepare for the Next Wave: Wearable Tech

There’s been a huge amount of chatter lately about Apple’s (NASDAQ:AAPL) apparent plans to bring a smartwatch to market, along with ongoing fuss about Google’s (NASDAQ:GOOG) Project Glass augmented reality glasses.

After years of false starts, have technology and demand finally reached the stage that wearable technology could take off and become the next big trend in consumer electronics?

Wearable technology has a long history in pop culture (the classic reference being Dick Tracy’s wristwatch radio in 1946), but limitations have always held back commercialization of these products.

Early smartwatches were nothing more than glorified calculators that also kept time. Huge, ugly and expensive, they didn’t stand a chance as mass-market devices. Sony (NYSE:SNE) took a crack with its Android-compatible Sony SmartWatch early last year, but failed to catch the public’s attention … at least not in a good way. Gizmodo called it “maybe the worst thing Sony has ever made.”

Google’s augmented reality glasses are nothing new in concept, but they offer something that versions developed through the years have lacked: connectivity, power and (relative) discreetness.

Early attempts required helmets to stabilize massive cameras and electronics. Later, they evolved into goggles. Now, we’re finally reaching the point where these products can be more or less disguised as regular eyeglasses — although no one has been able to deliver a breakout yet. Even the star power of Lady Gaga wasn’t enough to save Polaroid’s GL20 Camera Glasses.

Google Glass and smartwatches have been subject to considerable derision, comparing this wearable tech phase to the Segway scooter. In other words: technologically impressive, but expensive, lacking a real market, somewhat dorky-looking and ultimately doomed to a niche market at best.

However, I think we’re reaching a turning point for wearable technology.

Google’s doing the smart thing by investigating designer frames for its glasses. While $1,500 is steep, that price is likely to come down to a friendlier level with mass production. We haven’t seen any prototypes yet, but Microsoft (NASDAQ:MSFT) is in on the act too, with a recent augmented reality glasses patent.

Meanwhile, wearable tech has stealthily snuck up on us in other forms. Nike (NYSE:NKE) has a hit with its Fuel Band motion-tracking bracelet, while other companies like FitBit are selling tons of sensor-equipped clip-ons and bracelets to track everything from motion to sleep patterns. Oakley is selling Airwave ski googles with a built-in GPS, heads-up display and iPhone connectivity.

While a novelty in 2011 and even 2012, smartwatches that connect to your smartphone to music, email and Facebook (NASDAQ:FB) have been one of the hot stories out of crowdfunding website Kickstarter. They also made a splash at this year’s Consumer Electronics Show. Apple is the one that everybody has been watching, with an apparent consumer appetite for smartwatches and investors becoming vocal about launching a new product, but its rival Samsung (PINK:SSNLF) also looks to be getting in the game.

At the same time, chip makers continue to innovate at a furious pace. For example, consider the latest Freescale Semiconductor (NYSE:FSL) chip that was just featured in Wired. This chip has a 32-bit processor, flash memory, RAM, a clock, I/O control unit and other components. That might not sound impressive until you learn the whole thing measures just 1.9 mm by 2 mm. With this kind of miniaturization, wearable devices are only going to become more powerful and less obtrusive.

If wearable tech like augmented reality glasses, smartwatches and medical/activity monitors really takes off, does that mean the mobile revolution — the move to smartphones that fueled the dramatic rise of Apple — will be over?

In a word, no. At least not for years.

Yes, technology has reached the point where a ton of functionality can be packed into an incredibly compact form. But there still are limitations, and you can expect to see wearable tech supplementing those smartphones instead of supplanting them. With Bluetooth pairing, wearable tech can let those smartphones do the heavy lifting. There also are safety concerns when it comes to radiation from mobile phones, and the last thing you’d want to do is wear a pair of smartglasses with a cellular chip plastered against your skull.

At this point, the so-called iWatch remains a rumor, albeit a pretty strong bet given the recent success of other smartwatch launches, like the Pebble and the TikTok (which used Apple’s own iPod Nano). News from Bloomberg also reports a team of 100 product designers holed up on Apple’s campus at work on the project.

We know Google’s Project Glass is real; it had all the signs of being an interesting R&D experiment in early 2012, but Google Co-Founder Sergey Brin has been spotted wearing the things everywhere for the past six months. Now Google is taking applications for beta testers and there’s even an ETA for consumer availability: late 2013.

There will be a slew of startups to keep an eye on as wearable tech develops, but I expect established technology giants like Apple, Google and Microsoft to leverage their mobile know-how, supplier relationships and brand recognition to take the lead. And if things do take off, wearable technology could be the match that ignites the next phase of stock growth for one or more of these companies. (Remember, Apple was trading under $10 when the iPod was introduced in 2001; it was at $85 when Steve Jobs unveiled the iPhone in 2007; it was at $192 when he introduced the iPad in 2010. It reached $700 just months ago, though obviously AAPL has struggled significantly since then.)

The company that introduces a must-have wearable gadget could find itself in a similar situation.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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