It's smart to invest at the beginning of a trend, isn't it? The wearable devices industry seems to be in that stage of its business life cycle. Although some wearables have been around for quite some time, interest in these devices has picked up in recent times with the foray of big companies into this sector. While the adoption rate of these devices is open to conjecture, what is undeniable is that wearable devices are here to stay and become an intrinsic part of our lives in the near future.
The potential future
The first question you may ask -- so what comprises the wearable devices market? It's confusing, and it's quite fragmented at the moment. Companies are experimenting with everything. Wearables could mean gadgets like smartwatches, connected fitness bands and eyewear, bracelets, pocket-sized and clip-on devices, etc. although the largest demand for wearables at the moment are in two areas -- smartwatches and wearable medical devices.
A Juniper report forecasts that the value of wearable devices would reach $19 billion by 2018 from about $1.4 billion in 2013. Smartwatches constituted almost 50% of the wearables market in 2013 with Samsung (NASDAQOTH: SSNLF) leading in market share.
The numbers are impressive and so are the technologies. However, I believe, that to have a potential future, products should cater to a longer term need. Wearable devices in health care and sports seem to make sense at this point in time. And that's where, I think, the money is.
The future market makers and movers
Transparency Research estimates the wearable medical devices market to reach $5.8 billion by 2019. In context, FitBit, a start-up focused on digital fitness trackers and health devices, raised $43 million in August 2013 . The company is looking to launch a portfolio of new products. A report from Zatz Not Funny suggests that the company plans to add new features such as heart-rate monitoring, atmospheric condition monitoring such as wind speed and temperature and global positioning system (GPS) through its new Fitbit Surge, Fitbit Charge and PurePulse offerings. It has some very big names to compete with. Let's take a look.
Apple (NASDAQ:AAPL) is rumored to be working on the iWatch that goes beyond replicating the functionalities of a smartphone. If rumors are to be believed, the iWatch will have as many as 10 sensors to monitor health and fitness, thereby making health-tracking a regular and accessible affair. The company has also launched the HealthKit platform which will allow "apps that provide health and fitness services to share their data with the new Health app and with each other". UBS recently revised Apple's EPS estimates upwards on expected sale of 21 million iWatches in FY2015.
Google (NASDAQ:GOOG) (NASDAQ:GOOGL), also launched Google Glass in 2014, a wearable computer with an optical head-mounted display, announcing its entry into the wearable devices space. The possibilities for the product are immense, from health care, media, to sports.
Google has reiterated its commitment to wearable devices with the launch of Android Wear watch OS and to complement it, the company is 'planning to launch a new health service called Google Fit to collect and aggregate data from popular fitness trackers and health-related apps' , similar to Apple's Health-Kit.
LG has already announced the Lifeband Touch and Heartrate Monitor which track progress during workouts.
Other companies such as Samsung and Motorola are in the process of launching additional wearable devices running on Android Wear.
Other benefactors of the wearable devices boom will include the components makers. Some quick ideas include LG Display , the Korean display maker rumored to be the suppliers for iWatch and Qualcomm that will supply the processors for the Android Wear smartwatches.
Also, wearables will inevitably give rise to privacy and security concerns. As more people adopt wearable devices, they will become the target for malware developers and data hackers. Fitness devices, for instance, contain a lot of personal and health data, which if compromised, can be fatal. Players in the data security space such as Symantec are also expected to benefit from the wearables boom.
Keep an eye out for companies that are a part of the wearables eco-system, be it manufacturers, suppliers or software providers. One of them just might be the winner that can change your fortune.