Qualcomm, Android Wear, and Competition in Miniaturization

Yesterday Qualcomm unveiled their newest Snapdragon creation which has been custom designed for the smartwatch/wearable category. On the heels of this announcement, there are a few critical observations to make when we think about the future of wearables.

Custom Silicon
The first observation, which should be obvious, is the role custom silicon will play in the future of wearable technology. While I say this seems obvious, what was interesting was how the first few years of wearable solutions from Qualcomm, and others, were repurposed smartphone chips. Alternatively, in some cases, in the early Pebble and Fitbit era, they were still off the shelf low-power and low-performance chips. Apple was the only company to launch with a purpose-built solution for Apple Watch. Moreover, that was a big reason Watch, on the whole, was superior to competing products.

This sheds light on an interesting problem most companies designing semiconductor platforms ran into. Their designs were primarily focused, and specialized to a degree, on certain large-scale markets like PCs, servers, and smartphones. With the advent of IoT, automotive, wearables, and many new things on the horizon, semiconductor companies like Qualcomm started creating an underlying architecture would be more flexible and with little effort, the base architecture could be tweaked in a way to focus on new markets and do so quickly. Creating a semiconductor platform used to be a 3-4 year process and now with a more customizable solution, it can take less than two years to create a specialized chip for any number of use cases.
This flexible platform approach, which is mostly employed by Qualcomm, puts them in a position to bring more customized parts to new markets, faster, and help competitors compete with those more vertical silicon companies like Apple.

Qualcomm and Android Wear
While we haven’t seen Apple’s latest offering with Apple Watch Series 4, Qualcomm’s latest solution looks to provide brands with a range of options that will allow them to differentiate and compete. The SnapDragon Wear 3100 gives brands a range of options to customize their digital experience around the things they want to emphasize. Where I think this gets interesting is the pure fashion brands, and how they may want to customize watch faces, complications, and other new experiences that are unique to their brand.

One of the smarter things Qualcomm did, enabled a pure low-power mode that will allow the smartwatch display to be on at all times. In talking with customers, specifically premium fashion brands, Qualcomm found the lack of always-on display was a big negative for fashion brands who develop specific looks visually of their watch faces. Having a watch face on a smartwatch that is always-on has been a long time customer request, and it will be interesting to see if Apple solves this with Series 4 or if Android Wear may have a significant differentiating point for a year.

While Apple still has the dominant smartwatch market share, varying from 45-50% of the market’s sales depending on quarter, I’m not sure we have seen the best foot forward from traditional watch brands, and it’s possible this new platform from Qualcomm, and new chipsets in the pipeline, will give new tools to watch brands to start to compete in new ways.

Competition in Miniaturization
I’ve said this before, that all the efforts Apple has been doing in silicon and with Apple Watch are paving the way for their efforts in all other forms of miniaturization. When you step back and look at what is happening in the semiconductor industry, I was getting worried that Apple would have such a large lead in miniaturization that companies would have a hard time competing in the small computer era.

From what I see right now, only Qualcomm is in a position to help companies compete in miniaturization. This is not just with smartwatches but looking ahead to augmented reality and other wearable technology that will create a network of personal technology on our bodies.

When you put together what it will take to compete in the small computer era with customizable silicon, flexible platforms, rich software experiences, and the ability to do miniaturized hardware engineering loaded with sophisticated technology, there are not many companies well positioned to do this. This is why Qualcomm’s efforts here are essential. Given the challenges of Intel and Samsung not selling semiconductor solutions to third parties, Qualcomm is the only company positioning itself to provide solutions for the next era in personal computing.

This is not to say there are not significant challenges remaining in the market. I still believe the more vertical solutions like Apple uses will yield the best customer experiences but not every company, most, do not have that luxury.

The vast majority of the market will rely on third-party platforms to help them go to market, differentiate, and compete. As tech gets smaller, and things that were once analog go digital, the opportunity becomes much greater but so do the challenges.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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