This year saw a number of companies expressing interests in the smartwatch sector. First, it was Apple that was rumored to be working on a smartwatch; Apple denied these claims (as they always do with products they have not unveiled officially). A few weeks later, Samsung came forward and said that it was working on an Android powered smartwatch; LG was not left behind as it was also rumored to be working on its own smartwatch.
It clearly seems like Microsoft wants a share of the smartwatch market as the company is rumored to be prototyping its own smartwatch. According to The Verge, the company has been developing this product for a little over a year. The report continued to add that Microsoft has requested 1.5-inch displays from a certain component manufacturer.
It is believed that some of the individuals who worked on the Xbox accessories and the Kinect sensor are currently working on this smartwatch. The smartwatch is still in the prototype stage and we will surely get more information as development progresses.
If Microsoft gets into the smartwatch market, it would be interesting to see how innovative and competitive the market gets and all this will end up being advantageous to the end consumer.