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Qualcomm Unveils Snapdragon Wear 2500 Chip for Kids' Watches

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Qualcomm Incorporated (QCOM - Free Report) recently announced that it has launched the Snapdragon Wear 2500 platform, designed specifically for children’s smartwatches. Watches built with this chip will support 4G connection and help children stay in touch with family, learn from its rich multimedia content, play games and stay active throughout the day. The optimized version of Android used in the platform will protect the wearers from malicious Internet content. The announcement was made at the Mobile World Congress Shanghai.

Fundamentals of the Snapdragon Wear 2500

The platform, developed by the company’s subsidiary — Qualcomm Technologies — features extended battery life by up to 14% compared with the prior generation versions, integrated sensor hub with pre-optimized algorithms, low power location tracking and fifth generation 4G LTE multi-mode modem, alongside a quad-core A7 processor. The chip is capable of supporting accurate location tracking by putting the latest global navigation satellite system and sensor fusion approach in use. It supports a 5-megapixel camera, gesture-based entertainment apps and tracks physical activity. The longer battery life is the key feature of this platform and is expected to last up to four days on a single charge. It fits in a 512MB memory footprint, and is engineered to consume low power by shutting off features which are not in use.

Qualcomm’s Bid to Capture an Emerging Market

The company had developed processors for wearables earlier. However, the wearables market did not experience the type of boom that tech experts had anticipated, as consumers continued depending on their devices for notifications or fitness tracking. But demand for kids’ smartwatches is growing rapidly. In fact, according to reports, nearly half of the total global smartwatch market consists of kids’ watches. The company sees high potential in making customized processors to capture this market.

Qualcomm has already started partnering with hardware firms and supplying the Wear 2500 to build the children’s smartwatches. The watches are expected to be released into the market later this year. The company’s lead customer for the Wear 2500 platform is Huawei. It is also collaborating with InvenSense, Inc. in this endeavor.

Price Performance

In the past three months, the stock has underperformed the industry with an average return of 3.2% compared with a 6% rise for the latter. It remains to be seen whether the new processors can capture the soaring kids’ smartwatch market and rake in more revenues.


Zacks Rank and Stocks to Consider

Qualcomm currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry space are Comtech Telecommunications Corp. (CMTL - Free Report) and Motorola Solutions, Inc. (MSI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and Ubiquiti Networks, Inc. (UBNT - Free Report) , carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech has an expected long-term earnings growth rate of 5%.

Motorola has an expected long-term earnings growth rate of 8%.

Ubiquiti has an expected long-term earnings growth rate of 18.6%.

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