March 25, 2014 7:00 pm JST

LG Electronics changes tack for smartwatch battle with Samsung

KENTARO OGURA, Nikkei staff writer

SEOUL -- Wearable devices are just starting to take off and global electronics companies are racing to release smartwatches ahead of rivals to capture a bigger slice of the emerging next-generation market.

     China's Huawei Technologies is releasing TalkBand B1 this month, and Apple is widely believed to be developing its own smartwatch. LG Electronics of South Korea will also enter the fray in a bid to outstrip its bigger rival, Samsung Electronics.

     LG plans to introduce a smartwatch jointly developed with Google. The G Watch will be released sometime between April and June this year. President Park Jong-seok of LG Electronics Mobile Communications Company said that the opportunity to work with Google "was the perfect chance for LG to really pull out all stops in both design and engineering."

     Google just unveiled its operating software for wearables, Android Wear, in mid-March. LG said that G Watch would work perfectly with the new OS and worked closely with Google from the initial stages of development.

     Specific functions and specifications of LG's smartwatch have yet to be disclosed, but the company said its new wearable device comes with voice recognition so that users can give voice commands. Industry experts also believe that G Watches will be able to connect with smartphones through wireless connections to send and receive messages, access social networking websites, and download applications. These functions are already available in existing mobile devices, so the question is -- how much more convenient will G Watch be compared to other user experiences?

     Google does not supply its Android Wear exclusively to LG. Motorola Mobility, which Google agreed to sell to Lenovo Group, also plans to launch a new product using this new OS this summer. Other smartphone makers are also said to be developing new products using Android Wear.

     However, the pace of innovation for IT devices is fast. They only lead for short periods. Therefore, companies stand to gain huge advantages from launching products built on the latest technology ahead of the rest.

     Indeed, LG and Google have recently released a string of new jointly developed products: Nexus 4 and Nexus 5 smartphones, among others. These smartphones are produced by LG and are sold under the Google brand.

     For LG, this close relationship with Google helps differentiate itself from Samsung in the smartwatch business.

     In September last year, Samsung released its Galaxy Gear smartwatch, but this device only works in sync with Samsung's sophisticated smartphones. The consumer electronics giant hopes to prop up slumping sales of its smartphones with the watch. In April, Samsung will launch its second-generation smartwatch, Gear 2, using an open-source software platform, Tizen, as its OS for the first time. By doing so, the company aims to solidify the uniqueness of its product. Tizen was developed by a consortium of companies, including Samsung and Intel.

     In contrast, LG's G Watch will be made compatible with all smartphones including those made by rivals such as Samsung. This business strategy may not produce much synergy for LG in terms of smartphone sales, but the company believes it can draw in more of those consumers unfamiliar with LG products until now. Moreover, the company need not create apps for the smartwatch because it uses Google's OS.

     Samsung accounted for 31.3% of global smartphone shipments in 2013, while LG only held a 4.8% share, according to U.S. research firm IDC. Given the low percentage of LG's smartphone penetration, it would be difficult for LG to pursue an independent and closed business model for its wearable devices similar to that of Samsung.

     This is exactly where the difference lies between these two South Korean makers. Samsung aims to capture more customers on the back of its large share of global smartphone markets, while LG strives to win over new customers through collaborations with rival makers. The two companies have been engaged in a fierce rivalry for the top spot in the TV and  home appliance market. It remains to be seen which company will come out on top of the looming smartwatch battle.