1 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

Day 2 Highlights

• While smart clothing has found enterprise utility, its everyday use is stillundefined.

• Fitness trackers can be inaccurate and alter thewearer’s fitness data, adverselyinfluencingtheoutcomeoftrainingplans.

• Thewristisprimerealestateforwearablesandmachinelearningisakeymarketenablerforwearabledevices.

On the second and final day of the Wearable Technology Show (WTS) 2016, wewitnessedlivelydebatesaboutthecurrentstateoftheInternetofThings(IoT)insmarttextiles,sportsandfitnesstracking.Wehaveoutlinedsomeofourkeytakeawaysbelow.

SMARTCLOTHINGHASFOUNDENTERPRISEUTILITY,BUTITSEVERYDAYUSEISSTILLUNDEFINED

Inapaneldiscussiononcreatingwearablesfor firstrespondersandthemilitary,MarkBernstein, CEO ofWearable Technologies, outlined how clothing for this segment ofcustomershaschanged.Publicsafetyprofessionals’uniformsneedtobepracticalanddurable,hesaid,withthedegreeofdurabilityincreasingalongwiththeintensityoftheworkcarriedout.Also,thesmartelementsthataccompanytheclothing—theswitches,lights,sensorsandbatteries—needtoblendinandnotobstructthewearer’sabilitytocarry out critical tasks, he said. Apart from durability, public safety professionals’garmentsneed tobewashablewithoutdifficulty—aproblemthathasbeensolved, toanextent,withthedevelopmentofwashableelectronics.

Whilemission-criticalclothingisbeneficialtopublicsafetyprofessionals,MaxwellLowe,Senior Analyst from the Defence Science and Technology Laboratory, acknowledgedthatitmaynotbeahighlysustainablebusinesscategoryformanufacturers.Lowenotedthatmilitariesandotherarmedforcesaimtobuylong-lastingproductsthatdonotneedto be replaced regularly, meaning these garments have a low frequency of purchasecompared to regular clothing.So, formanufacturersanddevelopersof suchhigh-techgarments,thismaynotbeasustainableproductcategory.

2 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

Figure1.APanelDiscussionAboutMission-CriticalClothing

Source:FungGlobalRetail&TechnologyIn another animated discussion on the future of smart textiles, the panelistsunanimously agreed that smart clothing has yet to find a practical, everyday use inpeople’slives.SvenBöhmerofStatex,asmartfabricandyarnsupplier,highlightedthelack of convergence between the electronics and textile industries. MatthewDrinkwater,HeadofFashionInnovationAgencyattheLondonCollegeofFashion,addedthat the fashion industry needs more opportunities for designers to work with suchtechnologyandlearnhowtocreateproductsthatwillhavemass-marketappeal.Figure2.APanelDiscussionontheFutureofSmartTextiles

Source:FungGlobalRetail&Technology

3 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

FITNESS TRACKERS CAN BE INACCURATE, ALTER THE USER’S FITNESS DATAANDADVERSELYINFLUENCETHEOUTCOMEOFTRAININGPLANS

BurkhardDuemler,Director of IT InnovationProgram&Projects atAdidas, presentedhis company’s findings on its fitness wearables. He mentioned that, in order to besuccessful,runningappsneedtohavefitnessprogramsthatusersfollowinadisciplinedmanner.Healsonotedthatmanyfitnesstrackersonthemarketexhibitvaryinglevelsofinaccuracyintheirreadingsoftheusers’activities.Thiscanleadtoanincorrectanalysisofdataandadverselyinfluencetheoutcomeofusers’fitness-trainingplans.

Duemlernoted that thewrist ismostdominantspot forwearables tobewornon thehuman body, and that fitness wearables should be measuring—not estimating—theuser’svitalsigns.Inconclusion,heremarkedthatgood-qualitymetricsandprecisedataanalytics can provide the right insights to help developers build holistic tools andimproveusers’dailylives.Figure3.AGraphRepresentingthePercentageofInaccuraciesDiscoveredinEightWristbandFitnessTrackers

Source:FungGlobalRetail&TechnologyTHEWRISTISPRIMEREALESTATEFORWEARABLESANDMACHINELEARNINGISAKEYMARKETENABLER

Participantsinadiscussionabouthowtobestdifferentiatefitnesstrackersinacrowdedmarket alsonoted that thewrist is prime real estate forwearables.AndrewStatham,CEO of ATO-gear, said that wearing an accessory on the wrist may never becomeobsoletebecauseitmakestheaccessoryhighlyvisibleandimpliescertainpositivethingsabout the social statusor lifestylehabits of thewearer. But in amarket floodedwithwristband trackers, device makers need to consider some key points in order tosuccessfullydifferentiatetheirproducts.

Mladen Barbaric, Founder and CEO of Pearl Studios, and Annina Verkkomaki, Co-FounderofOmuus, talkedabout thesedifferentiators.Barbaricpointedout thatmost

4 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

peoplewantawearablethatiselegantanddiscreetandthatblendsinwiththewearer’slook.ToappealtomorefemaleconsumersandAsianconsumers,whonaturallyexhibitsmallerphysicalcharacteristics,wearablemakersneedtointroduceproductsthatcaterto them,Verkkomaki said. She added thatmachine learning—throughwhich a devicerecordsauser’spatternsandadjustsitselfaccordingly—willbeanimportantenablerforthe market to grow, as people prefer to automate rather than program devicesrepeatedly.

Figure4.APanelDiscussionAboutActiveTrackingandItsSuitabilityforVariousPurposes

Source:FungGlobalRetail&TechnologyFinally,here isagallery that features someof theexhibitorswesawat the showandtheirexcitingproducts.

Figure5.VizualityStudio’sVRExperience

Source:FungGlobalRetail&Technology

5 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

Figure6.TheJaguarF-PACEConnectedCar

Source:FungGlobalRetail&Technology

Figure7.TomTom’sNewGolfer2Wearable

Source:FungGlobalRetail&Technology

6 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

Figure8.Samsung’sWearablesandtheVicoVRSensor,WhichSupportstheSamsungGearVR

Source:FungGlobalRetail&Technology

7 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

MARCH17,2016

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerAnalyst

SwaroopMuralidharResearchAssistant

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