Smartwatch: How Casio plans to take on Apple, Samsung

Last month, Sony revamped its Smartwatch, which communicates with smartphones and lets users play games or check Facebook by tapping their wrists. And a flurry of startups, like Pebble, are coming out with timepieces that claim to redefine what goes on the wrist.

“Suddenly, everyone’s discovered the wrist,” Kazuo Kashio, Casio’s 84-year-old chief executive, said in an interview at the company’s Tokyo headquarters. “We’ve known for a long time it’s prime real estate. We’re prepared.”

The spike in interest in wearable computing devices is shaking up the digital watch industry, catapulting a sleepy business to the cutting edge of personal technology. In the process, established digital watchmakers like Casio are finding that they must contend with new competitors.

But that is nothing new for Casio, a company with $3.06 billion in annual revenue that also makes compact cameras, musical instruments and calculators. For instance, the introduction of the smartphone, which has a better camera in every iteration, has knocked the makers of compact cameras for a loop.

Minolta exited cameras in 2006, selling its camera technology to Sony. This year, Olympus and Fujifilm each said they would drop lower-end models after plunging sales. Even heavyweights like Canon and Nikon have seen sales fall in their point-and-shoot models.

Shipments of digital cameras fell 43 percent in the first half of 2013 from a year earlier, according to the Camera and Imaging Products Association.

Casio has taken a beating, too. Last year, it broke even, but analysts say its focus on lower-end, thin cameras means it will continue to lose market share. This makes the company’s watch business even more important.

Sales in digital watches account for 85 percent of Casio’s operating profit of approximately $206 million. But in a report earlier this year, analysts for Credit Suisse said the advantage would increasingly tilt toward companies that focus on connectivity, apps and user interfaces.

  Moreover, the emerging role of the smartphone as a hub that keeps gadgets like smartwatches connected gives a distinct advantage to Apple and Google, which dominate the smartphone universe, those analysts said.

“Wearables are rapidly evolving from single-function, hard-to-connect, dumb devices to what we believe will increasingly become multifunction, always-connected, smart/aware devices,” they said.

Smartwatch: How Casio plans to take on Apple, Samsung