Will carriers sell smart watches in their stores? Is it time for smart watches?


Initially, the primary retail channel for smart watches is likely going to be online and at traditional retailers, analysts said, and not in carrier stores, especially if the devices do not have cellular connectivity.

"My suspicion is that the operators, generally speaking, are on the fence about whether or how to get behind this category," IDC analyst John Jackson said. "I think the manufacturers have to think very carefully about how to vest the carrier." He said that smart watch makers could give carriers a share of the margin they make on the devices. "For it to be successful I think the manufacturers are going to have to get creative with how they involve the operators," he said.

Creative Strategies analyst Ben Bajarin noted that carrier retail stores are small in terms of square footage, meaning they can't sell everything. Until the market shakes out into a few dominant players, the carriers are not likely going to get involved, he said.

However, Forrester Research analyst Charles Golvin noted that carriers are expanding sales of accessories, and smart watch could fit into that effort. "I think if the carriers see some margin opportunity in selling these accessories, there's no reason why they wouldn't want to carry them, especially through online stores where inventory is less an issue," he said.

A related question is whether consumers will be willing to pay an extra $5 or $10 per month to add a smart watch to a shared data plan, as consumers can do now with devices such as tablets through shared data plans from Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T). Analysts said it's not clear customers would be willing to do so, at least not at first.

"I think the value proposition is still so vague," Bajarin said. "This category doesn't necessarily align with carriers interests until it is a standalone connected device."

"I think that's a bridge too far," Golvin said of paying an extra $5 or $10 per month for a smart watch to connect to a data bucket. "If the carriers are convinced and the manufacturers are convinced that there is a market for the cellular-enabled standalone watch, then the carriers are going to have to figure out a business models that makes sense to them." He noted that putting the devices on an older network, like a 3G network, could make the business more attractive.