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Watchmakers think smart features will beat smartwatches

At least, judging by Fossil's latest raft of wearables releases.
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Fossil is the fourth-biggest watchmaker in the world, responsible for about 5 percent of global timepiece sales. The company produces watches for a variety of brands, including Armani, Kate Spade, Michael Kors and Skagen. This week, ahead of the holidays, all of those labels have launched traditional-looking analog watches that come with activity tracking, notification vibrations and automatic time setting. When a company feels this confident that its users want this tech, you know something's going on. That's because this is the moment that the future of wearables becomes a race to see how deep you can bury your geeky credentials beneath a pretty case.

Fossil's move has been coming since March, when it pledged that it would sell more than 100 types of smartwatches ready for the 2016 holidays. The majority of these devices, including the Misfit Phase and Skagen Hagen Connected, have analog dials that connect to your smartphone, offering activity tracking and notifications. In Skagen's case, the watch can also be used as a physical button to control functions on your phone such as triggering your camera or playing back music. It's a style of device that apes the sort of design popularized by Withings, which has been producing hybrid-analog watches since 2014.

Of course, you may be wondering why Withings' Steel isn't called a smartwatch, since it does so many of the same things. The line between a smartwatch and a watch that just happens to be smart is blurry -- and getting progressively blurrier each day. The conventional wisdom is that devices that hew close to the smartphone experience -- think Samsung's Gear range, the Apple Watch or the Moto 360 -- are smartwatches. That narrow definition excludes devices that lack a high-res display but otherwise do a similar job, like Garmin's Fenix and the Pebble, surely the original gangster of the category. But that seems like a fair dividing line, with less-sophisticated devices falling into the more generic category of wearables or fitness trackers.

It looks as if customers aren't too enamored with the idea of smartwatches, which offer a wide variety of features for little money. Perhaps it's because they're both highly power intensive and mostly operate as a companion device to your smartphone. IDC's numbers bear this out, with only 2.7 million smartwatches shipping in the most recent quarter, of which the Apple Watch took the lion's share of the sales. We're in a lull in the device cycle, sure, but it seems crazy that Garmin, Samsung, Lenovo and Pebble -- the rest of the top five -- could only manage 1.2 million sales combined. By way of comparison, IDC believes that 41.8 million "regular" watches will be sold in 2016.

It's here, in the gray zone between traditional watches and smartwatches, where companies like Fossil and Withings are hoping to make a killing. These companies can promise fashionable watches that don't look geeky, are simple to operate and offer the core benefit of smartwatches: fitness tracking. Even Apple, which originally pitched its watch as a universal tool that could run apps like your smartphone, has had to concede that fitness tracking is the main driver of its sales. Sure, the Apple Watch is the highest-selling wearable, and that's nothing to be sniffed at. But notice how the second-generation watch is marketed compared with the first, with an emphasis on helping people be fitter, healthier and more active.

We can also see this in the bleeding edge of smartwatch design, which has had to take several big steps backward in order to attract customers. Whereas the first generation of Android Wear devices were predominantly rectangular and futuristic, they're now virtually indistinguishable from traditional timepieces. That's not to mention that potentially as few as 100,000 Android Wear devices were sold in the past three months. It seems more obvious than ever that if a watch brand wants to go smart, it'll have to do so by hiding its technological prowess from the user.

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