Microsoft is not new to the game of smart watches, in fact they were a pioneer in this field. In 2004, Microsoft was the only game in town in the tech world. There was little competition, and it was a time where pretty much every smart device ran on Microsoft’s software. Due to lackluster competition at that time, Microsoft experimented with many things, they weren’t afraid to throw things against the wall to see what sticks.
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I wouldn't say "Microsoft has the most complete end-to-end ecosystem". They are getting better but in terms their ecosystems working together they are still behind google and in some ways Apple.
I don't think Smart watches will ever take off. It doesn't really make much sense since watches are more about style than functionality. Also who doesn't walk around with a phone on them and how many people are going to buy a smart watch over a smartphone (especially with the rise mid tier smart phones). To get the best out of these smart watches you need your phone which does all the things a smart watch does anyway (no more convenient either).
That aside, one thing that will hold this venture back is the support for Windows OS phones. It is still small. Bloody difficult to sell a smart watch when the phone OS is dominate yet
Let me answer that question with another question did the zune?