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Investing in the Wearable Computing Revolution for Dummies

You have a computer at arm's length right now. You might be reading this article on your laptop or desktop. You might have it open on your mobile phone or tablet. Information is always at your fingertips, feeding you whatever you need to know, as long as you know how to search for it. Technology has already taken over our modern lives, but it's about to get a lot more personal. The mobile revolution? That's old news. Get ready for the wearable revolution.

Wearable computing defined
The wearable revolution is the next big trend in computing, and it follows the progression of computers from large, bulky, impersonal appliances to small, portable, intimate assistants. Google (Nasdaq: GOOG  ) was the first company to make the promise of wearable computing real when it unveiled Project Glass earlier this year. Since then, the head-worn device has captured the media's attention like few devices since the original Apple (Nasdaq: AAPL  ) iPhone.

Head-mounted displays will be the functional heart of wearable computing, but they won't operate alone. A number of other wearable devices are either on the market or in development, and their functionality will enhance the features and capabilities of a well-designed head-mounted interface. I asked Fool graphics guru Dari FitzGerald to help me imagine what a wearable-computing getup might look like in the near future, and this is what we've come up with:

Let's take a look at how these elements might interact to transform the relationship between humans and computers, bringing us closer together than ever before.

Hardware and software: an interface in your face
Wearable displays would simply bring the information you need most from your screen to your face. If you've ever seen a sci-fi film, like The Terminator, where a character's vision is shown overlaid with status messages, you have a general idea of what wearable interfaces will look like. You might see new email notifications, relevant promotional offers, location-based information, or (should you really need it) how to find Sarah Connor.

There's been very strong commentary both for and against head-mounted displays. Tech journalist Farhad Manjoo is one of the few to have seen one of Google's prototype devices in day-to-day action. After meeting with Google researcher Thad Starner, Manjoo proclaimed that "if Google manages to pull off anything like the machine he uses, wearable computers seem certain to conquer the world. It simply will be better to have a machine that's hooked onto your body than one that responds to it relatively slowly and clumsily."

On the other hand, Project Glass' current design has drawn criticism from several noted augmented-reality pioneers. The device's small screen is the primary target -- it's simply not big enough to do everything that Google's daring concept video proposes. Keeping a transparent display legible as you move through your day also presents a daunting technological hurdle to overcome.

There's also the psychological impact of always-on, always-in-your-face computing to consider. Would having a machine practically connected to your brain really be better than a smartphone, as Manjoo suggests? Or would a constant stream of information further isolate us from other people, cocooning each user in the digital distractions they prefer? We already grapple with these issues every time our smartphone vibrates with a new message.

Wearable interfaces will be developed and perfected over the coming years, just as smartphones evolved from chunky early BlackBerrys to sleek, modern touchscreens. Head-mounted-hardware manufacturers will need tight software integration to earn the public's trust. A bad smartphone app can be annoying, but a malfunctioning headgear app might pose a physical danger.

Read more about the hardware and software companies that could gain (or lose) the most from wearable computing:

Smart sensors: computerized awareness
Your interface won't get very far without feedback, whether it comes from camera sensors, accelerometers, or health tracking devices. The sensor support structure behind your interface will help provide timely, relevant information based on your location and can also help maintain your health in subtle or overt ways.

Simple wearable-computing sensors are already common in the fitness industry, and more seem to get released every month. But Nike and Under Armour (NYSE: UA  ) are both pushing the usefulness of these devices to new levels. Nike's FuelBand, pictured above on the user's wrist, will compete with Under Armour's embedded accelerometer sensors. Athletes can make great use of these aids now, but making them relevant for wider audiences might not be as hard as you think.

Read more about the possibilities of intelligent, wearable sensors:

Connected computing: an unexpected threat
Effective wearable computing will have to access the Internet to be of any use. As such, widespread consumer adoption will hinge not only on the price point of the devices, but also on the cost of connectivity. It's here that we run into perhaps the biggest non-psychological roadblock on the way to a wearable world.

Major wireless carriers (and some landline service providers) are already implementing metered bandwidth, a payment plan that would make your data bill look a lot more like your water bill. Verizon (NYSE: VZ  ) and AT&T (NYSE: T  ) have now both switched their billing structure toward metered billing. Mobile data traffic has grown at a greater-than-exponential rate for years, and that rapid growth has clearly spooked mobile carriers.

If each user's data consumption simply doubles annually for the next five years, the average subscriber would wind up using 14.4 gigabytes every month in 2017. Wearable computing's demand for information -- whether communicating with voice-recognition servers or looking up reviews of the restaurant in front of you -- could easily push those demands even higher.

I doubt most families would be willing to pay a big premium for every wearable-computing setup in their home. There will be a tremendous battle between major wearable hardware and software developers and wireless carriers over the flow of data. Today's wireless 4G technology won't cut it in five years, but few mobile subscribers even take advantage of true 4G speeds today.

Something big will have to happen to ensure that the flow of data from your wearable devices doesn't have to push through costly data caps. That's something to watch even if you don't believe in this technology's future, as it could undermine many online juggernauts before the wearable revolution gains traction. I remain hopeful that this bottleneck will be blown open, and data can once again flow freely.

Wear (and invest in) the future
Apple-watchers will want more detailed updates on the company's moves, both in and out of wearable computing. The best source of that information is the Fool's brand-new premium research service. It goes through the key opportunities and threats facing the company, and comes loaded with a full year of updates. Get more information on this valuable resource.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights.

The Motley Fool owns shares of Under Armour, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Nike, Under Armour, Google, and Apple, creating a bear put spread position in Under Armour, creating a diagonal call position in Nike, and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (9) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 06, 2012, at 5:43 PM, JimmyZangwow wrote:

    Thanks for working this up. These are going to be like prosthetic devices, except they will improve the original manufacturer's equipment. Jobs for user experience cognitive psychologists and AI experts for a long time to come.

  • Report this Comment On August 07, 2012, at 3:23 AM, anuvaka wrote:

    I'd like to see a lot of these devices. And each one would bring up new problems to be solved. How do you wash your sensor shirt?

    Is surfing the web while driving unsafe?

    Can your sensor band get wet and will it work when wet?

    Most of all connectivity. Dead spots, price per bytes sent make you wonder where mobile operators will look like in a few years.

    I'll just wait a few years to find out.

  • Report this Comment On August 07, 2012, at 4:39 AM, FoxHat wrote:

    I can wait for the price to come down. Think I will invest in a solar panel, water well and survival food... for now.

  • Report this Comment On August 07, 2012, at 5:27 AM, XMFBiggles wrote:

    @ anuvaka -

    In order:

    1. Very carefully.

    2. Distracted driving is always inherently unsafe. But we already grapple with this problem every time someone crashes while texting.

    3. Nike's FuelBand site has the following info: "The Nike+ FuelBand is water resistant. It is safe to wear in the shower or when dancing in the rain. Since it's not waterproof, it's not recommended for use while swimming."

    4. Connectivity is the biggest concern and roadblock for further technological growth, at least in my opinion. That's why I devoted a fair amount of this article to discussing it.

    @ FoxHat -

    It may not take as long as you think for prices to decline. I'd expect prices comparable to modern smartphones by the end of the decade, at the latest.

    - Alex

  • Report this Comment On August 07, 2012, at 9:38 AM, hiddenflem wrote:

    My glasses look like that because the coating is peeling off. Have been waiting for that look to become cool for a couple years. Now I can tell everyone it's data.

  • Report this Comment On August 07, 2012, at 9:39 AM, hiddenflem wrote:

    Did anyone else invest in Kopin back in the early 2000's? I lost my shirt on it...guess the idea of small wearable screens was too early back then.

  • Report this Comment On August 31, 2012, at 4:29 PM, texas4141 wrote:

    I never post. But wanted console another wearable investor who lost money with me. Sorry hiddenflem; I lost my shirt on xybernaut. I think we were just ahead of our time.

  • Report this Comment On September 04, 2012, at 4:28 PM, hiddenflem wrote:

    thanks tex, i appreciate it :) water under the bridge.

  • Report this Comment On October 13, 2012, at 12:25 PM, wealthychef wrote:

    Two major points against this article. First, the wearable computing revolution won't come until a product appears that people want to actually buy. Second, that product needs to be user-friendly to the max in order to be bearable as a wearable experience. I think the "revolution" is a ways off.

    Apple's iPhone succeeded because Apple has a simple formula: when designing a product, focus on the user experience, including the experience of holding and looking at the thing, more than the technology. If these wearable devices are not "cool" in some sense other than the technology, which means if people cannot use them to do cool new stuff or make their lives easier, then they will flop.

    Having information in front of my eyes is cool as long as it's easy to change the information and hide and show it.

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