Salesforce Jumps On The Wearable Devices Bandwagon - Analyst Blog

salesforce.com CRM recently launched Salesforce Wear and the Wear Developer Pack, a set of tools that allow developers to create apps for companies spearheading the wearable computing devices phenomenon. Developers will be leveraging the company's Salesforce1 platform for this purpose.

The Salesforce Wear is an app development platform for wearable devices which has an open-source code and offers several reference apps, demonstrations and other related documents. Developers can build applications for smartwatches, smart armbands, smartglasses and other biometric authenticators.

Touted as the “next phase of the mobile revolution”, wearable computing devices such as Google Glass, Pebble smartwatch and Samsung Gear smartwatch have made many a headline. Salesforce has roped in ARM Holdings ARMH, Fitbit as well as Philips to further its wearables initiative.

It is worth mentioning that IHS expects approximately 50 million wearable units to be sold in 2014. The research firm also expects the sale of wearable devices to reach 180 million units by 2018.

With the current initiative, Salesforce will have a first mover's advantage as the wearable devices technology is still in its nascent stages. Moreover, the strong growth projections indicate that many people will be using wearable devices (for personal data monitoring, computing, Internet connectivity or otherwise). This data could be useful for companies.

Being an enterprise platform provider, Salesforce's initiative views the wearable phenomenon from the enterprise point of view and encourages developers to build applications useful for enterprises. This ultimately will speed up the enterprise adoption rate of wearable devices.

We consider the rapid adoption of the Salesforce1 Platform (approximately 1.5 million users) to bode well for the company's new initiative. Overall, the company's diverse cloud offerings and strong spending on digital marketing remain the catalysts. Moreover, strategic acquisitions and the resultant synergies are expected to benefit in the long run.

Although, the company is growing steadily in the cloud market, growth prospects have been rationalized to a considerable extent due to intensifying competition from International Business Machines IBM and SAP AG SAP. Moreover, continued weakness in Europe, currency headwinds and increased investments in research & development will keep margins under pressure.

Currently, Salesforce has a Zacks Rank #3 (Hold).