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Apple Inc. And ARM Holdings plc: The Wearables Revolution Starts Here!

You can tell the present is rapidly becoming the future when all your favourite sci-fi films seem to be turning into reality.

The motion control that John Anderton used in Minority Report is now the Xbox Kinect. The video phones of Star Trek are basically the iPhone. And now Scott Tracy barking commands through his watch in Thunderbirds is the Apple (NASDAQ: AAPL.US) Watch. What next? Perhaps robots of the future will be like I, Robot (and hopefully not Terminator)!

Rather better than a Casio

If you walk into the watch museum in Geneva, you will see that watches have always been at the forefront of technology, leading the way in miniaturisation and precision engineering. But the development of watches seemed to grind to a halt in the nineteenth century.

Until recently, people’s idea of a hi-tech watch was a Casio. But I think the launch of the Apple Watch will drag the watch industry, albeit kicking and screaming, into the 21st century.

So what do you think of the Apple Watch? To me it looks a bit big and clunky, but sort of cool. Rather like the first iPhone. I can see that it is only now that the technology and the miniaturisation to make the Apple Watch viable has been developed.

But, just as the cogs and fly wheels of the first watches were steadily miniaturised, so will the microprocessors of the Apple Watch. And this is where the innovative designs of ARM Holdings (LSE: ARM) (NASDAQ: ARMH.US) come in. The key advantage about ARM chips is their small scale and low power consumption. They are tailor-made for this type of application.

Nobody really knows how quickly this market will grow

Just compare the technological tour de force of the iPhone 6 to the original iPhone, which now seems incredibly clunky, primitive and slow. This shows what the future holds for smart watches. At the moment the early adopters, the tech-savvy and the rich will buy the Apple Watch. The great bulk of Apple’s sales are iPhones, and I suspect will remain so quite a while. But wait a few years and wearable tech will enter the mainstream.

How quickly could the wearables market grow? Well nobody, not even Apple or Google, really knows. And nobody really knows what the ‘killer’ wearable will be. Will it be the Apple Watch? Will it be Google Glass? We’ll just have to wait and see.

But what I can say is that we are just entering the stage where wearables are viable, where they will be at the leading edge of tech. And there are incredible possibilities. That’s why the shares of Apple and ARM have been resurgent.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK owns shares of Apple and Google, and has recommended shares in ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.