In just a few years, wearables will be something that we take for granted and that provide us with support throughout our daily lives. That is the unanimous opinion of the participants of the round-table. Against this backdrop, the use of wearable electronics will increasingly come to the fore – wearables don’t simply collect data, their connection to the Cloud means they can create real added value.
Fitness bracelets, smart watches, intelligent headphones, brooches with integrated electronics – hardly a day goes by without a new wearable hitting the shops or a new wearable company appearing on the market. This might sound familiar from the dotcom bubble of 16 years ago. And not without reason, as Johannes Kreuzer, CEO of wearable start-up cosinuss states: “We are currently going through the hype phase where a lot of things are being done simply because we can. But I believe that, after the hype, the developments will be channelled and wearables will come to the market that offer real added value to users.” The same is also true of the wearable he has developed, which is used by sportspeople in particular to precisely measure aspects such as heart rate and heart rate variability, and for the first time, body temperature while they are moving. Christian Stammel, CEO and founder of Wearables Technologie AG is even more specific: “We can definitely say there is a hype surrounding fitness bracelets, but this is already starting to wane somewhat. Now, we are seeing smart watches with an integrated fitness tracker function coming into play. What’s more, we expect that a third of all wearables will be intelligent patches by 2020, basically plasters with integrated electronics. Smart plasters that measure insulin levels are already currently being sold in the health market. We are therefore not just seeing one hype, but many small hypes within the entire wearable technologies’ growth curve.” Stammel sees wearables as forming part of the general movement towards the Internet of Things. “The Internet of Things is in no way a hype. It is a logical development of the Internet which will change the industry with lasting consequences, just as it will every other area of life.”
Electronic components have developed
Markus Strecker, CEO of Teiimo, believes that a fundamental reason for the rapid growth in the wearables sector lies in electronics: “In the last few years, there have been many developments in the MEMS sector, making them very affordable to use today. We have made great progress in the energy efficiency of microcontrollers and in wireless technologies. Today, there is a simply a huge choice of good components that can be integrated into a variety of products at a reasonable price.” Teiimo incorporates electronics into clothing, for example, and among other items, has developed the “iilation” jacket – a heated leather jacket with hands-free equipment and mobile phone charging function. The company specialises in this kind of “conformable electronics” – malleable 3D electronic components – as well as integrating them into textiles, and also supports other companies with its know-how.
Nevertheless, the wide range of electronic components for wearables exists thanks to the hype surrounding this technology, as EBV expert Markus Vogt underlines: “The semiconductor industry needs an initial hype and the high demand connected with this to initiate new developments and to be able to pump the associated investments into new components.” Markus Strecker believes that the development of flexible, adaptable electronics is a good example of this: it enables electronic components to be integrated into clothing – according to Strecker, this offers many opportunities for the future – take medicine, for instance. Vogt, who is responsible for Healthcare and Personal Health at EBV, sees yet another advantage of the current high demand for wearables in the consumer sector in terms of medical applications: developments can be tested here which will then be applied in medicine in a few years’ time. “Technologies are being refined, enhanced with new software solutions and certified for application in medicine – in the end, there might be one out of ten consumer applications that can reasonably be used in the medical sector.”
Big opportunities in the health-style segment
Doing both at the same time, i.e. developing a product both for medical application as well as for the consumer sector, does not work – at least not in Johannes Kreuzer’s experience: “The requirements are totally different. That’s why we chose to concentrate first on the consumer sector – because the market is simply faster. The switch to the medical sector will then happen at a later stage.” Nevertheless, he believes that the line between the sport and medical sectors will become increasingly blurred in the future, and that there will be consumer products that will at least partly meet the high requirements of the healthcare sector, such as in terms of measurement accuracy. The first product of this kind does in fact already exist: the blood pressure monitor developed by French company Withings, as Christian Stammel maintains: “This is a medically certified device that was sold in the Apple store. A shining example of the new wave of healthcare products that are so beautifully designed that they can also be sold in a consumer electronics store.” Stammel sees this market between sport and certified medical products, which he calls the health-style segment, as a particularly exciting sector for wearables. “These products are usually bought by private patients and therefore no longer look like typical medical devices, as a lot of attention is paid to their design.” Nevertheless, an overlap between the two segments also carries a risk, as Markus Vogt warns: “In the USA, there are currently two legal proceedings pending against Fitbit, as the devices weren’t producing data that was accurate enough.”
Diverse applications in industry
However, it is not only in medicine that the participants around the round-table envisage a large number of possible applications for wearables in the B2B sector. Johannes Kreuzer can imagine different scenarios that involve monitoring vital parameters, for example. He believes this could be as interesting to firefighters for surveillance on duty as it could be for the military – or even in industry: “The attention level of an employee in the production industry could be monitored so that if they are too tired to work carefully, they would be sent on a short break. This would of course be difficult from the point of view of labour legislation, but possible.” Christian Stammel names another typical example of a wearable used in industry: “Google Glass was used by all major global consulting firms to demonstrate its potential in logistics or in industrial manufacturing. There are several successful companies whose head-up display solutions are used in a professional environment. This is a huge market, which is at the dawn of a great revolution.” Although this revolution does not necessarily need its own “industry wearables”, as Stammel continues to explain: a good smart watch can be worn by a private individual just as much as it can in the business sector by a member of field staff, for example, who can view data from the SAP system on it. “At the end of the day, it is the back-end structure that decides for me if I have a B2C or B2B wearable.” This doesn’t mean that developing specific wearables for professional use cannot also be worthwhile – Layla Keramat, Executive Creative Director of frog, gives the example of a helmet for construction workers. frog is an international product design and strategy company, and helped to launch the helmet on the market: “Using the helmet, a construction worker can access information or take photos on site, which can help to clarify problems with colleagues at the headquarters, for example. This video capture function is also significant for training new professionals.”
Wearable, service and software are inseparable
This example suggests that to do business with wearables successfully, it is not only the device itself that is important. “It’s an amalgamation of service, product and software which isn’t separable,” explains Layla Keramat. Markus Strecker also emphasises that although information is the most important factor today, it is the hardware – sensors, microcontrollers etc. – that makes it possible to generate and use this information. “Hardware and software cannot be separated. Proper use of a wearable involves the entire eco-system, the complete value-added chain from the individual sensor right up to the Internet platform.” Nevertheless, it still appears that the most significant factor for wearable providers is the money they earn. Christian Stammel estimates that not even 2 per cent of the turnover is generated by software. “But we are expecting that in the next five years, 20 per cent will be earned through hardware and 80 per cent through the supporting service and software.” Layla Keramat can even imagine that the data generated by wearables itself even become so valuable that companies with the appropriate business models would pay for it: she believes that “data is the new currency”. “We shouldn’t exclude the possibility of being paid to wear a tracker.”
But this would only work with the appropriate structure in the background: “If the data retrieved by the wearable is not connected to Google Now or Siri, for example, the user experience will reach a dead end,” according to Layla Keramat. And Stammel adds: “Wearable users only want to receive information from the flood of data that is important to them personally – this only works if the wearable is directly connected to the Cloud. This makes it possible to consult additional data from the surrounding environment – this gives the user access to meaningful data and creates real added value.” As an example, he talks of an asthmatic who is jogging in unknown surroundings: while a tracker measures the pulse, the user receives additional information from the cloud, for example about CO2 levels in the air. By combining the two pieces of data, the wearable can recommend the user to run more slowly and to lower their pulse to below 100, as they are otherwise at risk of suffering an asthma attack.
Focusing on the use
It is exactly this use that should be the focus when a company launches a new wearable onto the market, as is emphasised by Johannes Kreuzer: “You need to create a real use for and solve a problem with the wearable, otherwise you really only have a hype.” In addition to this, there is also a ground rule which is memorably summarised by Layla Keramat: “Don’t make it stop you from doing what you’re doing. This means that a wearable should support me when I’m carrying out my tasks but not provide a distraction.”
And Markus Strecker provides another important tip for start-ups: “On the other hand, you also shouldn’t neglect the market and you must know who the big players are. Even if I have a great device, as a start-up I can’t necessarily keep up with the marketing activities of a large company.” In the past few years, Markus Vogt has spoken to many start-ups who have not thought their business model through in enough detail. “We hold workshops with these people, define their unique selling point, for instance, and work out a thorough business model.” As a second step, Vogt recommends looking for a technology expert as a partner and implementing the project together with them right from the start. “Otherwise the electronics integrated into the wearable will quickly become out of date when the device comes onto the market.”
Crowdfunding as a PR tool
For many start-ups, crowdfunding platforms such as Kickstarter have proven an effective marketing instrument: “Even Kickstarter is observed intently by important global media sources. This is a fantastic PR tool,” maintains Christian Stammel. Markus Strecker adds: “If you receive good feedback from the community on the crowdfunding campaign, this means that many people actually want to buy the product. This is also a good way of finding financially strong investors outside of the community.” Nevertheless, crowdfunding should only begin when development is completed, as Kreuzer emphasises: “You must have reached the stage with your product where you are ready to start production.” Otherwise, the money gets used up very quickly in the development phase and there is nothing left to launch the product on the market. Although money from crowdfunding alone is not sufficient for an extensive market presence. “If a new wearable is to really take the market by storm, half a million products need to be put on the market quickly within two or three months – many young companies aren’t able to do this, however,” explains Vogt.
A technological leap
Even if the start can be difficult, the market is worth the effort. All the round-table participants are certain of this. They all proceed from the assumption that wearables will become increasingly significant in our lives. “There will be a leap as there was ten years ago when the smartphone was rolled out,” Christian Stammel believes. He predicts that over 50 per cent of applications will be based in the healthcare sector. Markus Vogt is also convinced of this: “Thanks to wearables, we will be able to get a better handle on lifestyle diseases such as diabetes or heart failure in the future.” Kreuzer adds: “Big data analyses in particular are proving an interesting prospect for wearables in the medical sector.” Markus Strecker quotes the market analysts from Gartner: „Forget fitness bracelets. Smart clothing is the future.“. And he adds: “To ensure the success of smart textiles, especially in the sport or healthcare sector, it will be critical to integrate technology so that it can neither be seen nor felt.” Layla Keramat provides us with a superb concluding sentence: “Wearables will become as important in our lives as glasses are for people with sight problems – and in exactly the same way, they will give us a kind of superpower.”