[In the last few months, many friends and colleagues asked me about my view on the future of the wearable market. They wonder if the glorious days are over for the current wearable makers with bigger players coming to the market. I decided to share my thoughts here with you all.]
What wearables have enabled is simple yet fascinating! Wearables have empowered us to discover more about our bodies and allowed us to quantify ourselves by monitoring our health, mood, performance, happiness, and actions 24/7. These are captivating phenomena that have become a reality through wearables. This is just the beginning, and it is by no means an end. In fact, the global wearable computing market will grow at a compound annual growth rate (CAGR) of 43%, from $5 billion in 2013 to $9 billion in 2014 and over $30 billion in 2018!
What follows are my predictions for how the wearables industry will trend. My view is based on analysis and observation of market demand, customer feedback, and user behavior:
1) One versus multiple winners: At the Health 2.0 Conference a few weeks ago, I had the opportunity of picking Vinod Khosla’s brain. When I asked him about the future of wearables, he said, “There is not one-size-fits-all when it comes to wearables.” He is absolutely right!
Ultimately there will be more than one major player in the wearables market. Based on my research and data collection from wearable users, consumers seem to have a wide range of preferences in terms of both the design and the use-case of wearable devices. Some admire products like Fitbit that are simple and mainly focus on health and wellness offerings. Others prefer products like Pebble or Moto 360that are in fact an extension of their mobile phones. Smart clothing is also getting some traction. With a wide range of quantified-self products displayed in this year’s New York Fashion Week including the Ralph Lauren Polo Tech Shirt empowered by Omsignal’s technology, this category will clearly have its own clientele.
2) Smart versus intelligent devices: Despite the fact that we call the existing wearables “smart devices,” most of these products are not actually that intelligent. What most of these devices currently do is collect data about your steps, weight, heart rate, and calorie intake without much intelligence on top of it to make the data meaningful and actionable.
Current wearables are not able to give you relevant feedback or provide you with useful tips for a healthier and more active lifestyle. The future generations of smart devices will in fact be able to change behaviors. Imagine a device that, as soon as you reach out for chips, notifies you that “This has 5x more carbohydrates and 35x more fat than carrot sticks (based on 100 grams of each). Do you want to substitute your snack?” Envision a wearable that buzzes when you’ve been sitting for the last 3 hours and encourages you to either go for a walk or at least stand up at your desk. These are smart devices that are truly intelligent and can lead behavioral change.
3) Everyday products versus single-solution providers: The wearable market will eventually divide into two categories: 1) every day products and 2) single-solution products. Products like Fitbit fitness trackers, Apple Watch, and Samsung Galaxy Gear will fall into the first category. Over time they will continue to become more sophisticated with more functions packed into a single device.
On the other hand, there will be a significant market for single-solution products that solve one problem really well and will be appealing to a specific group of users. For instance, pregnancy monitoring products will be in high demand, but they will be only attractive to pregnant women and only for a period of time – during their pregnancy. Zepp is another example of a single-solution provider. It allows tennis or baseball players to analyze their swings; while this is a useful product for a certain group of users, it is not for everyone or for everyday, all day usage.
4) Software versus hardware: Some argue that the future of wearables is in software and the hardware piece will eventually become commodity. I would argue that there are tremendous opportunities in both areas. As the wearable industry matures, it will become obvious who the market leaders will be — currently it’s Fitbit with ~70% market share. This will not only create opportunities for many developers/entrepreneurs to develop valuable applications on the winning platforms and build new businesses around it, but it will also substantially increase the value of the wearables to their users. A good analogy to this is the emergence of smart phones and the many app companies that built billion-dollar businesses around mobile (e.g. Instagram, WhatsApp). We will see history repeats itself for wearables.
In addition to applications for wearables, there are other emerging software products that will have significant impact in the industry. These players aim to be a centralized location for all data collected by different wearables. They want to make the collected metrics consistent — independent of their sources — and digestible by others such as physicians, coaches, employers, and insurance companies. Some players in this category include Apple’s Healthkit and Jiff.
There is also tremendous opportunity to create breakthrough hardware pieces. On the health and wellness side, there is still room to build products that can more effectively track essential metrics such as glucose and stress levels. Also, an automatic food-monitoring device that can work in the background and track calorie intake without user entering any information will become a reality at one point. Additionally, as a prominent investor and entrepreneur, Bobby Yazdani, told me, “There are significant market opportunities for enterprise wearables. Think of what you can do if you have wearables integrated to business processes and support business and employee productivity.” The opportunities on the hardware side could only increase as we find new ways to use them.
All these possibilities and examples testify to the fact that we are just at the tipping point of quantified-self market and that there will be tremendous opportunities ahead. This is also reflected in the Gartner 2014 Hype Cycle for Emerging Technologies report, where they predict that the wearable industry will continue to bloom in the next five to ten years.
If you are a wearable maker, go after it fast and furious. If you are a wearable user, please share your needs and insights, so that these companies could build the next generation of what you wish to see.