Report: Microsoft may also make smart watches

Suppliers told a newspaper that the company is sourcing components for a prototype

Microsoft is working on designs for a touch-enabled smart watch, joining a number of other large competitors like Samsung Electronics and Apple who are said to be working on similar devices, a newspaper reported.

Executives at suppliers to Microsoft told The Wall Street Journal that the company was sourcing components for the prototype of what could potentially be a "watch-style device."

Microsoft has, for example, requested 1.5-inch displays from component makers for the prototype, an executive at a component supplier told the newspaper. It is unclear whether the company will decide to go ahead with the watch, the newspaper added.

Microsoft could not be immediately reached for comment.

A large number of vendors are looking at new product categories beyond smartphones and tablets.

This isn't the first time, however, that Microsoft may be looking at watches as a product. It launched a smart wrist watch around a concept called Smart Personal Object Technology it unveiled in 2002, but withdrew it after a lackluster performance.

The Redmond, Washington, company is seeing its key PC market under threat from smartphones and tablets, and the failure of its new Windows 8 operating system to boost sales significantly. IDC said last week that first quarter PC shipments totaled 76.3 million units, down 13.9 percent compared to the same quarter last year. (The decline was worse than the 7.7 percent previously forecast by the analyst firm, and the market could be headed into further contraction, the research firm added.

Microsoft has been targeting new markets including by launching its own Surface tablets which by the fourth quarter of last year had not made a significant impact on the tablet market that was dominated by Apple and Samsung.

Gartner forecast in October last year that wearable smart electronics in shoes, tattoos, and accessories will emerge as a US$10 billion industry by 2016. Most of the revenue from wearable smart electronics over the next four years will come from athletic shoes and fitness tracking, communications devices for the ear, and automatic insulin delivery for diabetics, the research firm said. The new smart watches are expected to offer a variety of such applications besides telling the time.

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