Sony Releases Smartwatch 2 and New “Phablet”

Joe Goldman  |

With little near-term competition from Apple (AAPL), Google (GOOG) and other competitors, Sony (SNE) has emerged as the immediate leader in wearable technology after announcing the Smartwatch 2 on Tuesday.  The company also announced the Xperia Z Ultra, a phone-tablet hybrid.

Sony’s technology has become increasingly irrelevant over the past several years, sending the stock from over $37 in March 2010 to under $10 in November of 2012. While shares have risen to over $21 since November, the company needs to hit a home run with at least one of these products to re-establish itself as an innovator and a threat in the technology space.  Here’s what to expect from both devices.

Smartwatch 2

With a steep price tag, slow interface, and overall lack of features, Sony’s original smartwatch one left consumers disappointed.  This time around, Sony has solved most of the device’s shortcomings.

The device connects with most Android phones via NFC one-touch pairing and can automatically receive phone, message, email, and social media notifications from the Android device. It can also serve as a remote control for the Android’s music player so users don’t need to constantly look down at their phone. 

The watch’s display is 1.6-inches, is waterproof, and can read sunlight to automatically adjust brightness.  Sony is set to offer over 200 apps, including Gmail, Twitter, Facebook, weather, calendar and alarm.  Aesthetically, the Smartwatch 2 looks similar to renderings of Apple’s (AAPL) unreleased iWatch.  A price has not yet been announced, although the watch is set for release in September.

Stefan Persson, Sony’s head of companion products is excited about the future of smartwatches. “The future of wearable devices is incredibly bright with analyst research predicting 41 million ‘smart’ watches will be sold by 2016,” said Persson. “We have over 200 unique apps dedicated for Sony Smartwatch with over one million downloads to date and we are continuing to work with our strong developer network to deliver ever more compelling smartwatch experiences.”

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Reactions to the device were lukewarm, but the Smartwatch 2 is nonetheless the only smartwatch on the market.  As a result, it remains to be seen whether the Smartwatch 2 will set the industry standard or will be an unfulfilling appetizer to superior wearable products from Apple and Google.

Google Glasses and Apple’s iWatch are expected to get mainstream launches sometime in 2014.

Sony Xperia Z Ultra

With Sony trailing Samsung, Apple, Blackberry, Microsoft, and others in the global smartphone market, the company made a somewhat aggressive move on Tuesday by releasing the Xperia Z Ultra, a 6.4-inch “phablet” or phone-tablet hybrid.  The device is waterproof and runs on Android 4.2.  It also has a full HD display, a 2.2 GHZ processor, 2 GB of RAM, and is powered by Qualcomm’s ultra-fast Snapdragon 800 chipset.                                   

While the phablet concept is semi-unexplored territory, Sony investors probably shouldn’t get their hopes up.  Phablets haven’t caught on yet because they are impractical; the device is too large to fit into a pocket and is fairly awkward to hold up to an ear for an extended period of time.

As a result, the Xperia Z Ultra is positioned in the market as a fully functional tablet, not as a phone.  The tablet market is certainly a tough one to crack, as Apple holds an overwhelming market share lead in the space.  However, Apple has lost some of its brand appeal in the last year, so Sony could steal some of Apple's sales if the device exceeds performance expectations.                                

Sony Plays Catchup

The success of at least one of these devices is critical for Sony moving forward.  The company has fallen behind to newer innovators like Apple, Google, and Amazon (AMZN), so the stock could certainly use a new catalyst moving forward.

Successful launches for both of these devices starts and ends with marketing.  While the phablet is a tough sell, Sony has a very rare opportunity with the Smartwatch 2.  The device is the only game in town when it comes to smartwatches, so Sony’s marketing team must convince potential buyers that they don’t need to wait for the Apple iWatch to experience the future of wearable technology.

 Since the product announcements, Sony shares are up 6.27 percent to $21.19.

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