The perception that the wearables market is stagnating is understandable. Recent news seems to be mounting that key industry players are going away or struggling: Jawbone folded, Intel is shutting its wearables group, Fitbit’s sales are down. However, there is a common thread among these happenings. They reflect the first phase of wearables market growth, which is coming to a close.
The first phase of the wearables market growth was all about activity tracking – counting steps, counting calories, basic estimates of activity levels, etc. However, the value of that information is minimal on an ongoing basis. The first wearables generally got people moving, but didn’t provide deeper insights into how one’s body is actually responding to the activity they are doing, whether that’s sitting on a couch, running a marathon or managing a disease. This will define the next phase of wearables market growth.
We are now in a transition phase to that next phase of wearables growth with far more compelling user experiences driven by deeper insights into what’s actually going on inside a person’s body. One of the best ways to measure how a body is responding to its environment is to measure heart rate and other biometrics, and one of the best ways to measure biometrics in wearables is with optical sensor systems using photoplethysmography (PPG). We’ve covered how optical heart rate monitoring works in the past, but it’s safe to say the reason you’re seeing many new wearables come to market with biometric technology is to achieve deeper insights into the body’s response to its activity level.
The benefits of these types of devices are numerous but here’s a few of the most important:
- Deeper individual insights – They provide a broader picture of a person’s overall personal health by measuring things like heart rate, resting heart rate, and heart rate variability. For example, resting heart rate has been shown to be a proxy for overall cardiovascular condition and steadily increasing resting heart rate is correlated with the progression of cardiovascular disease.
- Predictive analytics – generating longitudinal biometric data correlated with activity levels and other environmental factors enable predictive analytics for entire populations and eventually at an individual level. In other words, doing more of Activity A is making you healthier, and you need to stop doing Activity B because it’s going to kill you.
- Changing healthcare delivery – today healthcare delivery can be described as episodic/reactionary; you go to your doctor once or twice a year (maybe), they take measurements, and look for abnormalities. In many cases, those abnormalities don’t present until it’s too late. Biometric wearables are enabling a future where healthcare delivery can shift to continual/proactive; using wearables to identify deviations from the mean that enable healthcare providers to catch health issues much earlier.
Providing insights into what’s going on inside a person’s body is not limited to a fitness band or your smart watch. Wearables are proliferating across not only consumer electronics, but are also gaining meaningful traction in:
- Health & medical wearables
- Military, first responder, and industrial safety
- AR, VR, and gaming/eSports
(As a side note, you’ll also notice from the graphic above that the diversity in wearable form factors is ramping up quickly. Equating the wearables market with smart watches is no longer accurate. AR/VR, medical wearables and hearables are just a few examples of new form factors taking off in popularity.)
Not surprisingly, health and medical wearables are showing the highest growth rates of the categories above, primarily due to the growth of patient-generated health data (PGHD). Wearables are a part of PGHD but PGHD also includes data from things like connected glucose monitors, connected blood pressure cuffs and many more home health devices that are almost all connected to the internet these days.
In general, there are two types of companies going after the market opportunity around PGHD:
- Consumer wearables companies – see recent announcements from Apple, Fitbit, Samsung, Garmin, and others.
- Health, medical device, and pharmaceutical companies – they recognize that patient care and monitoring is increasingly shifting outside medical facilities. Many companies in this segment are building devices that collect medical-grade data outside medical facilities and feed that data back into an electronic medical record (EMR) or patient treatment protocol of some kind.
There are many challenges to the next phase of wearables market growth, so we’ll cover three of the biggest challenges we see:
- Usability and motivation – market analysts tend to severely underestimate how difficult it is to change a person’s behavior, even when understands exactly how it will benefit them. Inertia is a powerful force in all areas, but digital health in particular. Here’s a great article expanding on this topic, if you want more detail.
- Validation and believability – there is still much work to be done in clinically validating wearable biometric technology for specific health and medical use cases. Until then, many healthcare providers and payers will remain unconvinced of the efficacy.
- Data integration – getting the data to the right place, at the right time, in the right context. The last thing healthcare providers need is a flood of data from a wearable without context or in the wrong context. We need to provide actionable insights in the right context that adds value to the patient treatment process. This may be the biggest challenge of all right now.
Other than the challenges outlined above, why haven’t we seen the next phase of wearables market growth take off yet? Again the reasons are numerous, but we’ll point out a few here:
- First, most companies involved in wearables to date have been consumer electronics companies. These companies are very good at making hardware, but not accustomed to building devices that actually create data that needs to be integrated into a user experience.
- Second, we’re in a unique time in the market when the capabilities of the hardware have been well ahead of the software/UX. Going back to the atrial fibrillation example, it has been possible for years to detect atrial fibrillation using consumer biometric wearable technology (Valencell demonstrated this at CES several years ago). However, you don’t see any devices in the market yet utilizing this capability.
- Last, Individualized recommendations are very difficult. The saying that all people are different certainly holds true in this case, so making individual recommendations that are meaningful is hard. That’s why you’re seeing the early stages of this growth happen at the macro level comparisons, providing feedback such as “your resting heart rate is 15% lower than average for your age group.”
So why are we convinced this will happen at all?
The first phase of the wearables market was a classic example of solution in search of a problem. The myth of the general purpose wearable (h/t @techpinions) has been dispelled, and, as we’ve been saying for a while, the next phase of wearables growth is likely not one killer app or device.
In contrast, in the next phase of wearables market growth the problems are known, and wearables have been shown to be solutions to those problems. There are both technical and market dynamics that have us convinced:
- Technical – the question about whether or not biometric wearable technology can ever deliver medical grade accuracy and usability have been answered for numerous conditions, and we expect this will continue.
- Market – You are starting to see many more medical, pharma, and health/wellness companies involved in wearables now. These companies have more focus on medical-grade accuracy and what you can do with the data/insights to solve specific problems or address specific disease states. In addition, even the consumer wearables companies are starting to recognize the need for accuracy and relevance – see moves from Apple, Fitbit, Samsung, and others toward health (not just activity tracking) and, more importantly, getting clinical researchers and clinicians involved in the use case development process.
People tend to overlook the fact that over 100M devices sold last year, which is projected to nearly double by 2021 (IDC). And if you go back and review market analysts’ projections, they have tended to underestimate the market growth.
We are excited to be a part of driving the next phase of wearables market growth. Reach out to use if you’d like to partner to bring incredible new devices and user experiences to market.