Apple Inc. (NASDAQ:AAPL) appears to be testing a smart watch, just as well-known Piper Jaffray Companies (NYSE:PJC) analyst, Gene Munster, predicted over a month ago. Reports in both The Wall Street Journal and The New York Times Bits blog revealed the news this morning, citing anonymous sources at Apple Inc. (NASDAQ:AAPL).

Apple smartwatch

Early indications are that the watch will be made of curved glass and will possibly have many of the same functions as the iPhone. Apple Inc. (NASDAQ:AAPL) is said to be discussing the product with Hon Hai Precision Industry Co., Ltd. (TPE:2317). The company is reportedly working on the displays to make them more power-efficient and assisting chip manufacturers strip down their chips for use in a smart watch.

Of course, the watch would use iOS, and would curve around the arm. At this point there aren’t many details about the specifics of the watch. However, the potential for a wearable computer like a smart watch is huge. It could utilize Siri and offer mapping and text messaging. It could even monitor the wearer’s health or be used for mobile payments using Apple’s Passbook app.

While speculations abound about what a smart watch from Apple Inc. (NASDAQ:AAPL) could do, one thing is clear; the company is gearing up to release a product that could challenge Google Inc (NASDAQ:GOOG)’s Glasses. Apple Inc. (NASDAQ:AAPL) filed a patent last July that was similar to Google’s Glass technology.

Google’s Glass technology has been in the testing phases since last April, and co-founder Sergey Brin and other Google employees sported the glasses at a Google+ event last May.

At this point, Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) are in a race to the finish line to see who will come out with a wearable computer first. There’s another question to consider though; How will a smart watch or a pair of smart glasses be received by consumers?  Wearable computers is certainly an interesting development in the tech world and is one that will be watched closely in by techies and investors alike this year.