Microsoft smartwatch

As Apple’s manufacturing partner Foxconn recently began hiring workers for assembly of a next-gen iPhone and possibly a rumored budget iPhone, our friends over at Redmond are thought to be busy developing own branded smartwatch, smartphone and seven-inch Surface tablet. Both gadgets are viewed as direct responses to Apple’s rumored iWatch project, its wildly successful smartphone and the iPad mini tablet, respectively.

The smartwatch project is purportedly beyond the prototyping phase as Microsoft is said to have started aligning parts suppliers in Asia earlier this year, allegedly sourcing 1.5-inch screens. However, folks who apparently saw the prototypes warn it’s “unclear whether Microsoft will opt to move ahead with the watch” at this stage…

Lorraine Luk and Shira Ovide, writing for The Wall Street Journal Monday:

Microsoft Corp. is working on designs for a touch-enabled watch device, executives at suppliers said, potentially joining rivals like Apple Inc. in working on a new class of computing products.

Microsoft also “is continuing to test its own smartphone,” although it’s unclear whether or not the company will bring it to market, component suppliers said.

Microsoft a few years ago developed a SPOT service, which stands for Smart Personal Objects Technology. It was used in watches from Fossil, Suunto, Tissot and Swatch, all discontinued in 2008.

As for the Surface mini tablet, the Journal last week asserted that a seven-inch device is expected to go into mass production later this year.

One person familiar with Microsoft’s product plans said the 7-inch tablets weren’t part of the company’s strategy last year, but Microsoft executives realized they needed a response to the rapidly growing popularity of smaller tablets like Google Inc.’s 7-inch Nexus, which was announced last summer, and the 7.9-inch iPad Mini introduced by Apple Inc. last October.

We first heard last November that Microsoft was considering a smaller tablet in response to Apple’s iPad mini, which went on sale in October 2012. The original Surface arrived in June of 2012 to mixed responses. Thus far, sales have disappointed. According to IDC, half of the tablet computers shipped in the fourth quarter were smaller than eight inches.

Additionally, Gartner researchers estimate the market for wearable smart electronics could be worth a cool $10 billion by 2016.

One analyst estimated the Apple smarwatch could drive an incremental $10 to $15 billion in revenue, or $2.50 to $4.00 in per-share earnings, each year, assuming annual sales of 50 million units and an average selling price between $200 and $300.

iWatch concept (unknown 002)

Bill Campbell, Apple board member and Chairman of the Intuit board, who was a close friend of Steve Jobs and advises Apple executives, last week alluded that Apple’s next major breakthrough could be wearable technology:

Noting that he was not at liberty to give away specific details on future Apple gizmos, Campbell did tell the audience to expect to see “a lot of things going on with the application of technology to really intimate things.”

In addition to Apple and Microsoft, LG, Google and Samsung are all said to be working on their own smartwatch products.

If Samsung made iWatch

Apple filed for a number of patents and posted job ads that potentially reveal its unusually high activity in the wearable computing space.

A report last week suggested Adobe’s former Chief Technology Officer Kevin Lynch, who recently landed a new job as Apple’s vice president, is now working alongside Apple’s Technologies head Bob Mansfield and a team of 100+ engineers on wearable projects for the iPhone maker.

Mockup top of post via Cult of Mac.