WITH growth slowing in the US$358 billion handset market, Apple Inc and Samsung Electronics Co are developing digital watches that will allow users to make calls, check map coordinates and monitor physical activity.

They might want to talk to Tokyo-based Sony Corp, whose feature-laden SmartWatch, on sale for more than a year, isn't mesmerizing the public.

Costing US$130, Sony's 1.3-inch touchscreen watch wirelessly connects to Android smartphones using Bluetooth technology. The gadget alerts users to calls and allows them to reply to e-mails or texts with an array of pre-written messages. It even connects to Facebook and Twitter and controls a wearer's phone-based music library.

The SmartWatch, about the size of an iPod Nano, is a slightly smaller successor to Sony's LiveView watch. Introduced in 2010, it had more limited features and was hobbled by kinks. The newer model is more stylish, although users can't enter messages and it sometimes requires daily recharging and a stable connection to reliably tell the time.

"Sony was ahead of its rivals to release a watch, but it takes more than an idea to create a hit product," said Keita Wakabayashi, a Mito Securities Co analyst in Tokyo. "It's about bringing a product that has functionalities that people would want and marketing the product in the right way."

Tentative promotion

Technology market research firm ABI Research estimates that 1.2 million of these digital watches will be sold globally this year, generating about US$370 million in sales. By 2015, ABI projects, sales will increase more than 20 times.

Sony's promotion of its own, however, has been tentative.

"It is an accessory for smartphones and not a product we expected a huge shipment" of, said Yu Tominaga, a Sony spokesman. He wouldn't say how many watches the company had sold but said sales "haven't been bad at all."

The company expects sales to grow as Sony and other developers add to the watch's library of more than 200 applications. Its appeal is limited because it's only compatible with Android devices.

Roger Kay, the president of market researcher Endpoint Technologies Associates, said the SmartWatch is too expensive for an add-on, too power-hungry and had too many bugs when it was introduced.

Sony's failure to gain traction with the SmartWatch is the latest in a long line of first-mover advantages the electronics giant has squandered. The Walkman and Discman dominated the portable music player market for decades before the iPod in 2001.

A year earlier, Sony began selling the Clié, a Palm OS-based personal digital assistant that allowed users to listen to music, play games and watch videos. The Clié didn't catch on, and Sony pulled it in 2005. Despite owning the distribution rights to thousands of popular songs and films, Sony failed to rival Cupertino, California-based Apple's iTunes for smartphones and tablets.

Sony released its first e-reader, the Portable Reader System, in 2006, a year ahead of Seattle-based Amazon.com Inc's Kindle. In 2009, although Sony's e-book library carried 600,000 titles, more than twice as many as Amazon's, the PRS didn't resonate with consumers.

Too inward-looking

Shoji Nemoto, a Sony executive in charge of technology strategy, said last August that the company's research had been too inward-looking and deliberative and should focus more on customer feedback.

"I don't think the brand carries as much weight as it used to," said William Stofega, a program director at market researcher IDC. "They don't really market it as well as they should."

Amid the setbacks at the main electronics business, which was unprofitable for a second straight year, executives will give up their bonuses. The board backed a proposal from the CEO Kazuo Hirai that management forgo bonuses worth 30 percent to 50 percent of their annual pay in the year to the end of March.

Hirai pledged to revive Sony's electronics operation by cutting 10,000 jobs and shifting away from the unprofitable television unit after he took the top job in April last year. The stock has been underperfoming Japan's benchmark index. Sony gained 25 percent, while the Nikkei 225 Stock Average rose 48 percent over the past year.

US$6b opportunity

The first companies to win over consumers with smartwatches could lock users into their platforms, boosting sales of phones, tablets, apps and TVs. Apple alone has a US$6 billion opportunity in its iWatch, Oliver Chen, a Citigroup Inc analyst, estimated in March.

Other competitors include Italy's i'm Watch, which is selling a US$399 smartwatch it says has access to hundreds of apps, and Pebble Technology, which has raised more than US$10 million on Kickstarter.com for a US$150 watch compatible with both Android and Apple's iOS.

By the end of March, Pebble had shipped almost 55,000 watches ordered over Kickstarter.

Sony's watch would benefit from heart-rate measurement and other biometric capabilities, said Michael Morgan, an ABI senior analyst. "We expect them to do things a smartphone does not," he said.