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Galaxy Gear Return Rates Shouldn’t Worry Apple, Samsung

Early smartwatch troubles are just growing pains

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Wearable technology seems poised to take the spotlight from smartphones and tablets as the next wave of must-have consumer tech and the potential driver of a technology profit surge. Or is it?

Samsung (SSNLF) beat archrival Apple (AAPL) to the punch by releasing its Galaxy Gear smartwatch in time for the holidays. But things went off script from there — instead of scooping up early adopters and locking them in, reports are that return rates for the $299 Galaxy Gear have been hitting 30%.

That number indicates an unusually large number of buyers having second thoughts once they strapped their new Galaxy Gear on their wrist. The question is: Should competitors be happy that Samsung whiffed and opened the door for them to come in with a superior product, or does the Galaxy Gear experience indicate the market for a smartwatch is softer than thought?

The answer is important for Apple, sure. But Microsoft (MSFT) and Google (GOOG) are also listening as they continue work on their own versions of the smartwatch.

While the Galaxy Gear is the highest-profile stumble to date, it isn’t the first warning sign that the category might be a tougher nut to crack than expected. Sony’s (SNE) first generation of Android smartwatch was a disaster (Gizmodo’s review was titled “Maybe the Worst Thing Sony Has Ever Made”), and this year’s follow-up has failed to garner attention.

A PCPro article points out one of the biggest challenges facing smartwatch makers: Once people buy a smartwatch, it often fails to meet expectations and gets shoved in a drawer — in fact, most of the smartwatch owners surveyed had stopped using them. Given the warning signs, there’s concern that smartwatches could turn into a high tech boondoggle, a feature that sounds cool but falls flat and fails to gain consumer acceptance … think 3D TVs.

However, I still believe smartwatches have significant potential, especially for Apple.

Article printed from InvestorPlace Media,

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