FBIC Global Retail Tech Wearables TechCon Wrapup Mar. 17, … · 2015-03-17 · Fung business...

1 Fung business intelligence centre global retail & technology flash report: Wearables telcon 2015 Copyright © 2015 The Fung Group, All rights reserved.

March 16, 2015

Last week, the FBIC team attended Wearables TechCon, a wearable-‐tech conference held in Santa Clara, California, in the heart of Silicon Valley. The three-‐day conference was comprised of keynote speeches, technical classes, panel discussions and networking events.

We found some extremely valuable insights into the way consumers use, and often later abandon, wearables, and how wearables tie into consumers’ overall connected experience.

Our top three takeaways from this event are:

1. There is massive market potential in the world of wearables, with an estimated 455 million devices generating $46.5 billion in revenue by 2019, of which healthcare devices are anticipated to be the biggest category at 121 million units.

2. While wellness devices such as Fitbit are currently popular in the consumer sector, healthcare driven devices will be coming to market, once FDA approval is met for new devices and health-‐based platforms.

3. There is a lot of excitement focused around mobile devices, with an anticipated $21 billion in revenue from smartwatches alone.

WHY DO CONSUMERS ABANDON FITNESS WEARABLES?

Dr. Steven LeBoeuf, Co-‐Founder and President, Valencell, led a discussion identifying the major reasons consumers abandon fitness wearables. Some of the critical challenges in this category include educating consumers on their devices’ capabilities, and variations in the level of accuracy different devices provide. When polled, the majority of users who have abandoned fitness devices listed some surprising reasons behind their decision:

“I thought my fitness tracker would help me lose weight—but it didn’t.”

“I don’t really know what to do with the information I’m getting.”

“I forgot to wear my fitness tracker, so I just started using my cell phone instead.”

“The battery on my tracker died—so I switched to my cell phone.”


In addition to a lack of education on device usage, another problem for consumers is that not all wearables are alike and not all body parts are equal, which developers need to consider when designing wearables. One key issue across the board with wearables is that it’s important to identify for the consumer the level of accuracy for each type of data a device offers. The granularity of data will be different depending on what part of the body the device is worn. Additionally, physical movement can affect real-‐time data collection from a device. For instance, a wearable in the ear might measure body stress levels and their impact more consistently during a workout than a device on the wrist or arm would, because a device in the ear is less impacted by physical movement.

Once you identify your customer, you can better provide the type and application of data they need. However, there is a universal need in fitness wearables today to provide direction on how to apply the captured data. Most consumers don’t know how to appropriately integrate the heart rate or other activity data their wearable gives them into their daily lives.

There are currently three major uses of fitness wearables:

1. Lifestyle—for those who make fitness a part of their daily lives

2. In-‐session—for those who use their device during a specific activity, such as running

3. Health monitoring—for ongoing monitoring of a specific (usually preexisting) health issue

And there are three layers of user experience in fitness wearables:

1. Sensors—which track activity or measure biometrics

2. Assessing—understanding how the consumer’s fitness is changing with their activity

3. Directing—customizing direction for each consumer, using the individual’s biometric data and activity metrics and a physiological model

PREVENTING WEARABLES ABANDONMENT

The challenge of consumer adoption for new wearable products was a critical topic during the convention. What do consumers actually want their wearables to do for them?

In his keynote speech, Dr. John Feland, Founder and CEO of Argus Insights, a market intelligence company connecting technology innovation and consumer adoption, addressed the “sock drawer problem”—when wearables fail the consumer and ultimately end up languishing, unused, in the proverbial sock drawer.

To prevent abandonment, we must first figure out how wearables are failing consumers. In Feland’s words, “A [wearable] product launch and a rocket launch look a lot alike. You’ll know pretty quickly if it’s worked or not.”


The wearable goes through four phases in the consumer adoption process:

1. Buying—The consumer is excited about the new product, based on the success of the product’s marketing.

2. Learning—The first-‐time user experiences how easily they can interface with the product, and if it meets their expectations. How big is the learning curve for the consumer?

3. Using—The consumer tries out the new device to see how practical it is for their current lifestyle. Does it enhance what they’re already doing?

4. Succeeding—Success occurs if phases one through three have worked for the consumer.

One of the biggest barriers to entry for the consumer is just after the point of purchase, when things as simple as the ease with which one can power on the device and how quickly one can understand how it functions, really matter. If the device isn’t set up to cater to the customer, the “stickiness” factor will be low.

When designing the next generation of devices, keep in mind these things:

1. What you accomplish in the first 15 minutes with the customer will determine if they continue to learn more about your product.

2. People won’t change their habits of behavior to fit the wearable. The technology needs to fit the user, not the other way around.

3. Disruptive innovation can be bad for consumers if they can’t get past the disruption.

Feland believes wearables that will be broadly adopted by consumers will be designed for easy usage and multiple physical environments; will have adequately addressed usability issues such as those encountered with swipe and gesture control; will better bring people into an experience they already understand and know how to navigate; and will be habit forming in an organic way.

Matthew Goldman, Co-‐Founder and CEO, Wallaby Financial, who leads product development for the company’s wearables portfolio, indicated in his session on workable wearables that there are three major landmarks which need to be met for future wearables development:

1. Better hardware that is very small, extremely powerful and simultaneously power efficient

2. Better software development with vital case uses

3. A killer app—one that becomes a consumer’s must-‐have, go-‐to, life-‐influencing app

When Goldman asked the audience for their ideas on what primary needs are still present in the app market, the two main schools of thought were the need for authentication, in terms of security and data share, and increasing appropriation of data for medical uses, particularly with baby boomers.


WEARABLES AND THE CONNECTED CONSUMER EXPERIENCE

Luis Rincon, Co-‐Founder and CEO of Wearables.com, talked about wearables and the connected consumer experience. In a recent poll of consumers from millennials to baby boomers, he noted some interesting consumer wearable preferences.

These are the most desired product categories consumers are planning to purchase from, regardless of generation:

1. Smartwatches—34%

2. “Hearables”—33%

3. Stand-‐alone fitness trackers—29%

4. Smart glasses/connected eyewear—29%

5. Wearable cameras—29%

6. Smart clothing—22%

In the smartwatch category, the most desired features, regardless of the consumer’s generation, are:

1. Ability to give directions—52%

2. Battery capacity—45%

3. Voice activation features—45%

4. Calendar alerts—42%

5. Location-‐based information—39%

Of the pool surveyed, 33% said they would wear a piece of jewelry doubling as a device. A sizable 52% could see the benefit of wearables in both personal and work lives, and one in five parents would put an activity tracker on their child.

Some major wearables market opportunities that are still relatively unexplored are devices for child monitoring, elderly care tracking and healthcare monitoring, and organized youth fitness.

WEARABLES AND HEALTH

One of the hot topics at the convention was that of health-‐tracking wearables. According to Sanket Mehta of InfoStretch Corporation—a mobile and Internet of Things strategic solutions provider for healthcare, fitness, retail and automotive

companies—the mobile health market is expected to grow by 51% year over year, up to $23 billion by 2017.

Mobile health is a growing market because of an increasing:

• Proliferation of mobile usage

• Awareness of health and fitness

• Demand for quantified diagnostics

• Consumer need for real-‐time analytics

• Cost of healthcare

Major concerns to date about the mobile or wearable tracking of healthcare data include consumers’ fear that the data will be compromised and the idea that sharing personal data might affect their health insurance or employment.


For those developing healthcare OEMs, the following will need to be the major areas of progress over the next few years:

1. Regulatory and compliance issues

2. Bluetooth low energy connectivity

3. System integration, working in tandem with other devices and platforms

4. Device expansion—OS and OEMs

5. Increasing accuracy in data

6. Data security

INNOVATIVE COMPANIES

Here are a few companies we are highlighting, that are reshaping the way the community thinks about wearables development.

MC10 pioneers technology with a mission of extending human capabilities by making high-‐performance electronics virtually invisible, flexible and wearable. Their devices empower commercial product development for devices intended to enhance human function and transform human-‐electronic interaction. They utilize organic human energy to power advances from mobile network coverage, to robotics in education, to healthcare in rural areas.

One of their signature products, the MC10 Biostamp, is a tiny “tattoo” or “bandaid”—an ultra-‐thin flexible patch worn on the skin—that monitors physiological activity, with the ability to transmit this data to hospitals in real time in the case of high-‐risk patients.

OM Signal’s biometric smart wear is the first step in the company’s vision to transform the application of tech into textiles, literally weaving technology into clothes that consumers wear on a daily basis. Their products are currently focused on fitness tops for the athlete, which track heart rate, breathing rate and depth, activity intensity, steps walked and calories burned.

Valtonic—a tech company specializing in miniaturization and manufacturing for high tech applications—created an illustrated graphic novel book for the high tech community, with the intention of providing engineers with an informative alternative to a white paper or article.

OTHER INNOVATIVE TECH ADVANCES

Motilis Medica SA, a Swiss company, has an innovative digestible “wearable”—a pill-‐based technology that, once swallowed, provides diagnostics of the patient’s digestive system including data such as segmental transit time, 3D detailed dynamics of progression and motility indices.

Triggerfish, also called StingRay, is a new surveillance technology used to spy on cell phone users by tracking cell phone signals inside vehicles, homes and insulated buildings, acting as a fake cell tower. The side “benefit” to StingRay or Triggerfish is that it can extract data off of possibly thousands of other cell phone users in the area of the targeted cell phone user.

OrthoSensor’s VERASENSE Knee Sensor is an intelligent instrument that replaces the normal plastic spacer block used during knee replacement surgery. It’s embedded with advanced sensors, accelerometers, microelectrodes and wireless communication technology.

Neuromate is a stereotactic robot that provides a platform solution for neurosurgical procedures, including electrode implant procedures for deep brain stimulation, as well as other neuro-‐research applications.


IN CONCLUSION

The biggest take-‐away from last week’s conference is that the wearables market is both growing and changing at a very rapid pace. Consumers are increasingly savvy about whether a device is gimmicky or practical. But once data security issues are addressed to consumers’ level of comfort, certain categories of the wearables market—including health-‐monitoring wearables—will explode.

Deborah Weinswig, CPA Executive Director – Head Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: +852 6119 1779 [email protected] Marie Driscoll, CFA [email protected]

John Harmon, CFA [email protected] Amy Hedrick [email protected] Aragorn Ho [email protected] John Mercer [email protected] Stephanie Reilly [email protected]

Lan Rosengard [email protected] Jing Wang [email protected]

FBIC Global Retail Tech Wearables TechCon Wrapup Mar. 17, … · 2015-03-17 · Fung business...

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