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Apple Inc.'s Got a Big Watch Problem

Image source: Apple. 

Just a few months ago, Apple (NASDAQ: AAPL) made a couple of announcements around its Apple Watch product category. In a nutshell, it released a new Apple Watch Series 2 device with improved internals, a better screen, water resistance, and integrated GPS. It also updated the internals of the original Apple Watch to include the same processor as the one found in the Apple Watch Series 2 but kept the design and the display largely similar.

Interestingly, according to an August report from Bloomberg, Apple wants to include cellular connectivity in a future Apple Watch, but one of the challenges it faces is keeping battery life in check.

Indeed, Bloomberg says that "current cellular chips consume too much battery life, reducing the product's effectiveness and limiting user appeal," citing "people with knowledge of the matter." In response, Apple has reportedly "begun studying lower-power cellular data chips for future smartwatch generations."

This all seems very reasonable, but I believe that it highlights a key weakness within Apple's chip teams that the iDevice maker will need to remedy at some point down the line.

Integrating a cellular modem would probably help

As of today, Apple has yet to release a processor with an integrated cellular modem. In its iPhone and cellular-capable variants of its iPad products, Apple uses standalone applications processors paired with standalone cellular modems sourced from Qualcomm (NASDAQ: QCOM) and Intel (NASDAQ: INTC).

Other companies that develop processors for mobile use have 3G and 4G cellular modem technology in house and are able to integrate that technology into the same silicon die as the main applications processor. This is generally leads to better power efficiency and, ultimately, battery life.

For example, Samsung (NASDAQOTH: SSNLF) recently announced a chip targeted at wearable devices known as the Exynos 7270 that integrates a 4G LTE modem on the same die as the processor. Qualcomm, too, offers a chip known as the Snapdragon Wear 2100 that also includes an LTE modem on the same die as the main processor.

I suspect that if Apple had the capability in-house to integrate a cellular modem into a future smartwatch-oriented processor, this would be very helpful for tackling those potential battery life issues.

Apple may very well be working on it

There has been plenty of evidence that Apple has continued to build out teams to work on wireless chips. For example, Apple put up a job listing on Sept. 21 looking for someone to work "as part of a silicon design group responsible for designing state-of-the-art wireless" systems on a chip.

It's hard to know exactly what this might be for, but it could very well be in service of an in-house cellular modem effort for integration into a future Apple Watch processor.

Apple will figure it out, one way or another

Although it would appear that Apple is currently at a competitive disadvantage with respect to the integration of cellular modems inside its Apple Watch-bound processors, it's important to note that Apple is extremely technically competent and spends significantly on research and development in support of its key product categories.

The Apple Watch appears to be something that Apple is planning to invest in over the long term, and as a result I expect that one way or another it will be able to figure out how to get cellular connectivity inside a future Apple Watch. The question isn't really "if" but "when" -- and that's something that will become clear in time.

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Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple and Qualcomm. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.