deep dive: the wearables report - fbicgroup wearables report... · 3 ! july 8, 2015 fung business...
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
• The wearable technology devices market is expected to reach 134 million shipments globally by 2018, up from 61 million in 2015.
• By value, we project that global wearables sales will rise from $6.6 billion in 2015 to $16.8 billion in 2018.
• FBIC’s first golden rule for longevity in the wearables market is that devices must solve a genuine problem or add real convenience. Gimmicks, or functions that can be duplicated by a smartphone app, will not sustain a segment of the market.
• FBIC’s second golden rule is that devices must be able to sustain demand in a context of heightened competition—including from new wearables such as the Apple Watch and from external competition such as smartphone apps.
• We are optimistic toward devices such as lifestyle accessories, which offer benefits with broad appeal, and toward outwear such as jackets and coats with inbuilt functions.
Deep dive: THE wearables report
THE INTERSECTION OF TECH AND FASHION
D E B O R A H W E I N S W I G E x e c u t i v e D i r e c t o r – H e a d o f G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m N e w Y o r k : 6 4 6 . 8 3 9 . 7 0 1 7
July 8, 2015
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
T A B L E O F C O N T E N T S
EXECUTIVE SUMMARY 3
A MARKET THAT’S EXPANDING—BUT IN WHICH DIRECTION? 4
THE WEARABLE DEVICES MARKET IN NUMBERS 4
A TOUR THROUGH THE WORLD OF WEARABLES 8
CONCLUSIONS: WHICH WEARABLES WILL WIN? 17
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Deep dive: THE wearables report THE INTERSECTION OF TECH AND FASHION
EXECUTIVE SUMMARY • Global shipments of wearable devices will hit 61 million in 2015 and then climb to 134 million by
2018, representing a compound annual growth rate of 30.4%, according to research firm MarketsandMarkets.
• By value, we project that global wearables sales will rise from $6.6 billion in 2015 to $16.8 billion by 2018.
• Some 317 wearable products are on the market or are set to be launched soon, according to a database maintained by Vandrico Solutions. These devices span seven categories: industrial, medical, entertainment, gaming, fitness, lifestyle and pets/animals.
• Whether devices are targeting consumers or professionals, we think there are two key criteria they must fulfil to ensure long-‐term success. First, devices must solve a genuine problem or add real convenience—not be built on gimmicks that will struggle to maintain appeal longer term. Second, wearables must be able to sustain demand in the face of heightened competition from inside and outside the wearables space.
• We see sustained demand for fitness wristbands as being under threat from the Apple Watch and from limited long-‐term consumer appeal in measuring biometrics through dedicated devices.
• We think there is likely to be little broad appeal for sportswear featuring biometric-‐measuring smart fabrics even among fitness enthusiasts—the built-‐in nature of this technology means consumers would have to own numerous garments to gain any consistent (day-‐to-‐day) usage from it.
• We are more optimistic toward outerwear such as jackets, with added functionality such as LED lighting (for safety) or smartphone connectivity—these types of garments are often worn day after day and are a higher-‐price purchase, meaning the additional cost of the technology is marginal.
• We are also more optimistic toward lifestyle accessories including generalized products such as Apple Watch and the addition of functionality to existing accessories—such as the ability to charge a smartphone in a bag. We think these types of products offer broad appeal and the compelling reasons to purchase.
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
A MARKET THAT’S EXPANDING—BUT IN WHICH DIRECTION? If there’s one thing tech specialists agree on, it’s that wearable technology is an exploding category and that we are set for major growth in the coming years: some 60 million devices are set to be shipped worldwide just this year, for instance. Less clear, however, is which types of wearables will gain greatest traction. So far, much of the focus has been on the Apple Watch and fitness wearables also worn on the wrist.
But there’s a whole spectrum of devices which bring together apparel and tech—from smartphone-‐charging handbags to head-‐mounted gaming glasses to illuminated clothing for cyclists. Here, we profile a number of these products and the companies behind them, before drawing some conclusions on the distinguishing characteristics that are likely to mark the most popular types of wearables in the years ahead.
We define wearables as devices that put technology in an item of clothing, footwear or accessories such as wristbands or handbags. The technology will typically enhance the user experience and/or supply data on user behavior that is accessible through an accompanying application. In terms of products, wearable devices include smartwatches (Apple Watch, Samsung Gear), wristbands (Jawbone UP, Fitbit), VR/AR headsets (Google Glass), and smart apparel and accessory products (Misfit Shine).
THE WEARABLE DEVICES MARKET IN NUMBERS
Where Has the Wearables Boom Come From?
Wearables may be booming now, but one can make the case that the wearable device market was born in 1993 with the release of the Apple Newton PDA, the grandparent of the smartphones we use today. Over the past 20 years the market evolved through incremental improvements in the phone/smartphone segment to eventually develop product subcategories such as wearable cameras, fitness trackers, headmounted displays and smartwatches.
Figure 1. A History of the Wearable Device Market
Source: www.raconteur.net
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
In reality, it’s only very recently that wearables have moved into the mainstream and into the public’s consciousness. Technological development has, of course, helped, with the miniaturization of sensors called microelectromechanical systems (MEMs) being key to supporting the development of these products. Meanwhile, the success of products such as the iPhone and iPad has undoubtedly given impetus to product development by tech brands.
How Big Is The Market—And How Big Will It Become? Global shipments of wearable devices will hit 61 million in 2015 and then climb to 134 million by 2018, representing a compound annual growth rate of 30.4%, according to research firm MarketsandMarkets. Growth will mainly be driven by smartwatch sales. BI Intelligence predicts that smartwatches will account to 70% of all wearable device shipments by 2019, increase from 59% in 2014. and
Figure 2. Wearable Technology: Total Projected Worldwide Unit Shipments, 2013-‐18
Source: MarketsandMarkets
By value, we project that wearables sales will hit $16.8 billion worldwide by 2018, based on a compilation of multiple forecasts.
Figure 3. Wearable Technology Worldwide Projected Total Market Value, 2013-‐18
Source: ABI Research/HIS/MarketsandMarkets/FBIC Global Retail & Technology
35.7 46.5
60.6
79.0
103.0
134.3
0
25
50
75
100
125
150
2013 2014 2015 2016 2017 2018
Million Units
2.8
5.1 6.6
8.8
12.0
16.8
0
3
6
9
12
15
18
2013 2014 2015 2016 2017 2018
$ Billion
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
How Many Products Are There? Some 317 wearable products are on the market or are set to be launched soon, according to a database maintained by Vandrico Solutions. FBIC Global Retail & Technology found that 234 are available for purchase now, many of them through Amazon.com’s Wearable Technology store, which was launched in the US last year. The figure below brings together Vandrico data with our own data on average retail price.
These devices’ applications can be segmented into seven general categories: industrial, medical, entertainment, gaming, fitness, lifestyle and pets/animals. Because most of the devices on the market have multiple functionalities, one device can fall into more than one category.
Figure 4. Wearable Technology: Average Retail Price, by Function
Figure 5. Wearable Technology: Number of Devices, by Function
Source: Vandrico Solutions/FBIC Global Retail & Technology
$1,706
$649
$529
$524
$241
$199
$134
Industrial
Medical
Gaming
Entertainment
Lifestyle
Fitness
Pets Animals
188
124
55
41
33
21
5
Lifestyle
Fitness
Medical
Entertainment
Industrial
Gaming
Pets Animals
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
$119m
$23m $38m
TOTAL: $180 million TOTAL: $423 million
Head Hand/Wrist Body
$148m $155m
$120m
CROWDFUNDING VENTURE CAPITAL
Who Has Been Investing—and In What? High expectations have yielded high investments, so the supply side of the market is strong. Funding is flowing to the development of wearables on the expectation of a sustained market boom.
As small investors seek to gain a toehold on the bandwagon, crowdfunding has been a feature of the market. A sizeable $180 million of funds was raised for wearables startups through crowdfunding between 2009 and 2014, estimates Matt Witheiler at Flybridge Capital Partners. The figures show that most crowdfunding activity has financed head-‐mounted devices, with wristwear trailing substantially in this funding channel.
More than twice as much was raised through more conventional venture capital channels between 2009 and 2014, and these types of investors tended to favor wristband products and were more favorable to bodywear than were crowdfunders.
In total, the figures show that more than $613 million was invested in startups in the wearable space between 2009 and the end of 2014, with estimates from CB insights taking the total wearables investment dollars to $1.4billion over the same period.
Figure 6. Funds Raised By Select Products And Startups 2009 to 2014
Source: Flybridge Capital Partners
So those are some of the top-‐line numbers. Now, we turn to the products themselves, showcasing a selection of devices that span various categories and functions. The tour through the products will lead to our conclusions on what are likely to be the characteristics of successful wearable products.
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
A TOUR THROUGH THE WORLD OF WEARABLES In our showcase of devices and companies, we focus on seven categories: fitness, other smart fabrics or clothing, entertainment, lifestyle accessories, pets, industrial and medical.
Smart Fabrics & Clothing
One recent high-‐profile example of smart fabrics in apparel was the launch of Project Jacquard, a collaboration between Google and jeans maker Levi Strauss & Co., to incorporate touch-‐sensitive yarns into clothing. The aim is to make garments interactive by allowing the user to communicate with an electronic device by using simple gestures like tapping or swiping over a garment to send a wireless signal to the device and access its functionality.
Research firm MarketsandMarkets estimates that the smart textile market will grow to over $2 billion by 2018.
Figure 7. Global Smart Textile/Fabrics Market Revenue 2012-‐2018
Source:MarketsandMarkets
0.9 1.1
1.2
1.5
1.7
2.0
0.0
0.5
1.0
1.5
2.0
2.5
2013 2014 2015 2016 2017 2018
$ Billion
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July 8, 2015
Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Commuter Cycle Jacket
The Visijax Commuter Cycle Jacket is a lightweight nylon jacket with embedded LEDs lights, which flash when the wearer signals a right or left turn by raising an arm. The LED lights are powered by a concealed researchable USB battery, which lasts about 30 hours and are controlled by a power button icon on the jacket’s front. The jacket is washable and water-‐resistant.
The product was a contestant for the Innovation Awards at CES 2015 and is an example of wearable clothing that offers functionality and style. The jacket is retailing at $159.95.
Company: Visijax
Founded: 2011
Team Size: 1 – 10
Headquarters: London, UK
Funding: No information
Website: http://www.visijax.com
Source: Crunchbase, Company website
Smart Socks
The Sensoria Sock is a pressure sensing textile sock that accurately records user's footsteps based on the pressure and timing of the foot landing. It offers better results than the traditional accelerometer based wearable devices, which measure limb movements to calculate foot steps taken. It also detects cadence and balance for the wearer. The socks (two pairs) together with the anklet tracker and charger are retailing at $199.
Source: Vandrico Solutions
Company: Sensoria, Inc
Founded: 2010
Team Size: 11– 50
Headquarters: Redmond, WA
Funding: $5.6m
Website: www.sensoriafitness.com
Source: Crunchbase
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Fitness
Description: Devices that monitor physical activity
Fitness trackers have so far dominated the consumer market for wearables, under brands such as Fitbit, Jawbone UP and Nike FuelBand. Fitbit currently owns the largest market share (approximately 68%, according to research by The NPD Group). The category has been significantly impacted by the introduction of smartwatches, as they have the capacity to provide the same data as traditional fitness trackers.
So, if there’s mass uptake of devices such as the Apple Watch, we could well see a depressed market for fitness wearables, in the same way large-‐scale ownership of tablet computers cannibalized the market for e-‐readers.
Away from wristbands, there are opportunities in smart clothing. We showcase below Hexoskin, which incorporates sensors into sportswear. And we have also seen the emergence of brands such as OMsignal apparel that incorporates an embedded biometric sensor; Ralph Lauren’s Polo Tech Shirt that include thread sensors that monitor heart-‐rate, breathing and stress levels; and NuMetrex that uses sensory fibers to monitor the pulse.
The disruptive potential of other technologies means that the market is not expected to grow at an extraordinary pace. The market for sports, fitness, and activity trackers will grow at an annual rate of 7.5% for the next three years, reaching $2.6 billion by 2018, according to research group IHS.
Figure 8. Sports, Fitness & Activity Monitor Market Worldwide Revenue Forecast 2013-‐18
Source: IHS
1.9 2.0
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0
1
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2013 2014 2015 2016 2017 2018
$ Billion
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
The Hexoskin is a smart fabric shirt with built-‐in sensors that measure data such as heart rate, breathing rate and step count. The wearable device automatically syncs data to in-‐range mobile devices with wireless connectivity and has 150 hours of data storage capacity. The accompanying mobile app, HxDashboard, is used to display fitness data and analyze individual fitness performance. Data analyzed by the device includes: • Heart rate • Heart rate variability • Breathing rate • Breathing volume • Activity (steps, cadence, calories) • Sleep
The Hexoskin retails at $399.00.
Company: Hexoskin (Carré Technologies)
Founded: 2006
Team Size: 11 – 50
Headquarters: Montreal, Canada
Funding: $750k
Website: http://www.hexoskin.com Source: Crunchbase
Fitbit offers a range of wristbands designed to measure “everyday fitness,” “active fitness” and “performance fitness” through inbuilt accelerometers. The devices measure the number of steps taken by users to provide estimates on calories burned, distance walked and floors climbed, as well as information on activity duration and intensity and estimates of sleep quality. Some products also measure heart rate.
In June 2015, Fitbit launched an IPO that raised around $732 million for the company and gave it a total valuation of about $4.1 billion. The company priced its initial public offering at $20 a share, above expectations, and raised the proposed number of shares for sale to 36.6 million.
Fitbit has sold more than 20.8 million devices by March 2015, it was reported at the time of its IPO. Its products are sold through more than 45,000 stores in 50 countries, as well as through online retailers and the company’s own website.
Company: Fitbit
Founded: 2007
Team Size: 501-‐1,000
Headquarters: San Francisco, USA
Funding: $732m IPO in June 2015
Website: http://www.fitbit.com
Source: Fitbit
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Entertainment
Description: Devices that enhance the user experience during entertainment activities. These can include devices that receive and transmit real-‐time information to enhance the gaming experience
The MYO Armband allows users to wirelessly control technology with hand gestures. The device reads electrical activity in the muscles of the arm and hand to operate. It is capable of controlling music, game, and presentation applications running on Microsoft, Mac, iOS and Android operating systems.
Company: Thalmic Labs
Founded: 2012
Team Size: 50 – 200
Headquarters: Kitchener, ON
Funding: $15.6m
Website: https://www.thalmic.com
Source: Crunchbase
Select Device: CastAR
CastAR is a head-‐mounted display, which combines augmented and virtual reality. The device uses two projectors located on the rim of the glasses to project stereoscopic video, which is reflected from the surfaces surrounding the user. CastAR comes with a magic wand that can track its own position and orientation in space, which makes it suitable for various applications in gaming.
Company: Technical Illusions
Source: Company site, Crunchbase
Founded: 2013
Team Size: 11 – 50
Headquarters: Mountain View, CA
Funding: > $1m on Kickstarter
Website: http://castar.com/
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Lifestyle Accessories
Description: Devices that cover an array of functions, from facilitating users’ interactions with their smartphones to tracking data and running apps. The lifestyle devices have to appeal to the style of the user, as they are worn throughout normal daily activities. Devices in this category range from smartwatches to multipurpose trackers, eyewear, and headbands. In some cases, such as smartphone-‐charging handbags, this is about adding tech functions to an existing type of accessory. For others, most notably the Apple Watch, this fundamentally creates a new product from scratch.
The Apple Watch is Apple's first wearable device. It is a smart-‐watch with a retina display and circular dial on the side. Apple retails three types of Apple Watch: Apple Watch, Apple Watch Sport and Apple Watch Edition. Each model is available in two sizes – a small and a large – and Apple also has six different strap options, which users can switch around at their leisure. Apple Watch requires an iPhone 5, 5c, 5s, 6, and 6 Plus. The Apple Watch uses the GPS and Wi-‐Fi in the iPhone to track distance.
The Pebble smartwatch is a wearable device that provides immediate access to the user’s smartphone functionalities. It features an always on e-‐ink display and multiple native applications. Pebble is one of a number of wearables projects funded through Kickstarter. The smartwatch is available at $150.
Company: Pebble
Founded: 2009
Team Size: 11 – 50
Headquarters: Paolo Alto, CA
Funding: $46m
Website: http://www.getpebble.com
Source: Crunchbase
Pebble is noteworthy because of the amount of capital the company raised through Kickstarter crowdfunding campaigns. In 2012 when it launched its first campaign, it became the most funded Kickstarter project with $10.3M. For its second product, the Pebble Time, the company raised another $20.3M on Kickstarter, surpassing the previous highest grossing campaign for a second time.
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Charging Bag
Everpurse has developed a handbag that can charge iPhones. The startup has attracted interest from investors and industry incumbents in the fashion and accessories space and is now working in collaboration with Kate Spate to launch a collection of charging bags in the Fall of 2015.
According to the Wall Street Journal, the bags will cost between $198 and $698. They will have the ability to charge the iPhone 5 and iPhone 6 models. The bags themselves won’t require a cable to get charged, but instead they’ll need to be placed on a charging mat, which charges the battery inside wirelessly. The bag’s battery charge should last the average user about two days.
Company: Everpurse
Founded: 2012
Team Size: 1– 10
Headquarters: Chicago, IL
Funding: $1.0m
Website: http://www.everpurse.com
Source: Crunchbase
PETS/ANIMALS
Description: Devices that connect pets with their owners via a sensor worn by the animal and a mobile app to display and interpret the data from the sensor
Whistle is a wearable device for dogs that tracks their activities and location via a sensor that attaches to the dog’s collar. The device has wireless connectivity that communicates with the Whistle mobile app to help ensure that the user’s dog won’t be lost. Whistle provides information on the dog’s everyday health and monitors activity levels. The device can be purchased for $99.00.
Tracking capabilities: • Medication tracking • Activity tracking (running time, sleeping time, etc.) • Health trends • Food log (allows daily logging of food to avoid over and underfeeding)
Company: Whistle Founded: 2012
Team Size: 11 – 50
Headquarters: San Francisco, CA
Funding: $21m
Website: http://www.whistle.com
Source: Crunchbase
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Industrial Description: Devices that transmit and receive real-‐time data in work environments.
It may be less glamorous than an Apple Watch or a Fitbit, but there’s likely to be big demand for wearables in industries from energy, oil and gas to healthcare. In some cases, the types of products will overlap with some of the consumer categories we have already showcased—notably apparel, where there’s scope to build safety features (such as LEDs) or security functionality (cameras) into workwear.
The industrial wearable market (also called the enterprise wearable market) has been gathering speed over the past year. Companies such as APX Labs, which specializes in helping businesses use wearable technology to boost worker productivity, have come under the spotlight by attracting venture capital investment. According to Peter Barris, the Managing General Partner of New Enterprise Associates, which led the Series A round for APX Labs, the makers of wearable tech have realized consumers want anything they wear, including technology, to “have a style element”. However, employers may ask their workers to wear anything that can make them safer or more effective, as evidenced by scrubs, helmets, latex gloves, safety glasses and other less fashionable accessories. Hence, there is a substantial opportunity for wearable devices in the industrial space, because of this different value proposition.
According to ABI research the market for enterprise wearable technology will balloon over the next three years at an annual growth rate of 56.1%, reaching a market size of $12.2 billion by 2018.
Figure 9. Enterprise Wearable Technology Worldwide Projected Total Market Value, 2014-‐18
Source: ABI Research
The AiRScouter is a wearable head-‐mounted display. It projects images in front of the user’s eye on the lens of the glasses. The device is built for industrial purposes—specifically, device assembly and remote operation support. The technology’s assembly support
allows the user to access the information necessary to assemble complex devices. The remote operation support allows the user to receive audio and video instruction from off-‐site specialists.
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$ Billion
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Medical
Description: Devices that monitor vital signs and medical data
Another major non-‐consumer market for wearable devices is the medical field, where wearable technology can be implemented to understand and treat patients’ conditions. The consultants McKinsey forecast that $2 trillion could be saved worldwide by 2025 with a 10-‐20% cut in the cost of treating chronic diseases through using mobile sensors. The HIS further estimates that 5 million patients will be using wearable technology and remote monitoring by 2017 worldwide.
Select Device: DuoFertility
DuoFertility is a device that maximizes the chances of conceiving naturally by measuring the body’s basal temperature, which shifts upward during ovulation. Using this information, DuoFertility alerts the user of the time of ovulation up to six days in advance.
DuoFertility is available for purchase between $385 and $1,299 in the UK depending on the level of support services offered by the company, and will soon launch in the US.
Company: Cambridge Temperature Concepts
Founded: 2006
Team Size: 11 – 50
Headquarters: Cambridge, UK
Funding: $4.4m
Website: http://www.duofertility.co.uk
Source: Crunchbase
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CONCLUSIONS: WHICH WEARABLES WILL WIN?
So wearables are already spanning a huge range of categories across consumer and professional usage. More will undoubtedly emerge and some of those we’ve profiled will likely falter.
In this highly competitive space, we think there are some basic criteria for wearable devices to achieve longevity:
• Devices must solve a genuine problem or add real convenience—not be built on gimmicks that will struggle to maintain appeal longer term.
• Devices must be able to sustain demand in the face of heightened competition from inside and outside the wearables space—for instance from smartphone apps that can offer similar functionality.
Given, this, which types of products may become the winners and losers in this space? Below we offer our opinions (and they are just that, given the nascent status of the market) on the categories that look to have a red flag flying over them or that appear to have a green light to power ahead.
Red Flags:
We have particular doubts over the solidity of the fitness wristbands segment. How many consumers have a genuine need or interest in monitoring their exercise regimes so closely over the longer term, and how many of the purchases so far have been gimmick-‐driven? Moreover, even where there is demand, consumers have the lower-‐cost option of smartphone apps to measure their fitness metrics. Finally, there is a very real risk that general-‐purpose devices such as the Apple Watch (and smartphones) may cannibalize the wristbands segment.
For similar reasons, we are cautious in our outlook for smart fabrics in sportswear. This category has the added potential problem of being embedded in a product that can only be worn once before washing. If a fitness enthusiast wants to measure their biometrics consistently (and they don’t want to do laundry every night), they will need to own several smart garments. So this segment looks to us to be a bulk-‐purchase or no-‐purchase market. Our concern is that the vast majority of consumers, even among those who are into fitness, will opt for the no-‐purchase option.
Green Lights:
We are more optimistic toward smart outerwear such as coats and jackets. These types of garments are typically worn day after day, with irregular washing, so there’s no disincentive for consumers to buy into smart clothing with just one garment. Moreover, outerwear is also typically a higher-‐price purchase, so the additional cost of the technology is marginal. Finally, we think the possibilities for added features are broader than the biometrics focus offered by smart sportswear. For instance jackets with smartphone connectivity may appeal to young consumers, in-‐coat LEDs to improve visibility may attract worried parents who are buying for their kids, and jackets with inbuilt cameras may attract cyclists or industrial users where recording the work environment is important.
We are also optimistic toward a range of lifestyle accessories. We have little doubt the Apple Watch will be the standout winner of the wearables market, at least in the immediate future. And we think there’s scope for adding tech into existing accessories, with innovations such as smartphone-‐charging bags appearing to offer real added convenience for consumers. These kinds of products look likely to draw broad consumer appeal and provide compelling reasons to buy into the wearables category.
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Fung Business Intelligence Centre Global Retail & Technology Deep Dive: The wEARABLES REPORT Copyright © 2015 The Fung Group. All rights reserved.
Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: +852 6119 1779 [email protected] Cam Bolden [email protected] Sunny Chan, CFA [email protected] Tal Dor [email protected] Marie Driscoll, CFA [email protected] John Harmon, CFA [email protected] Aragorn Ho [email protected] John Mercer [email protected] Swarooprani Muralidhar [email protected] Charlie Poon [email protected] Kiril Popov [email protected] Stephanie Reilly [email protected] Lan Rosengard [email protected] Jing Wang [email protected]