The Consumer Electronic Show in Las Vegas brought 160,000 guests from around the world to a four-day conference showcasing all things tech, from new consumer drones to foldable TVs. What really stood out was how many of the 3,800 exhibitors were showing us some form of wearable device, whether for fitness tracking, security, fashion, or something else.
Here are the trends that investors in this space should be watching this year.
No. 1: The saturation of the fitness wearables market
When I first walked into the Sands Expo Center, where part of CES was held, I was blown away by just how many different fitness tracking wearables I saw. Fitbit (NYSE:FIT) held a large part of the floor showcasing their newly released "Blaze" touchscreen tracker. Companies like Polar, Garmin (NASDAQ:GRMN), and other brands old and new all showed off new models as well. I'm not the only one concerned by how crowded this market is getting; Fitbit's stock price dropped 13% in the first day of CES and more throughout the week seemingly on fears that Fitbit isn't able to offer anything differentiated enough to keep competing effectively in this crowded space.
Watch for acquisitions in 2016. Fossil (NASDAQ:FOSL) purchased fitness tracking brand Misfit in November 2015 to complement its line of fitness tracking, professional-looking watches. This could be a strategy for other companies looking to enter this market, or for companies already in the market trying to increase market share. Fitbit has already said acquisitions will be part of its strategy in 2016.
Investors should also watch for companies that are innovating past simple wrist tracking devices. My bet in this space is Under Armour (NYSE:UAA) since it's new fitness tracking wristband is only one part in a whole connected ecosystem. At CES, Under Armour released its "HealthBox," which includes a wristband tracker, chest strap heart rate monitor, and connected scale that all work with the Under Armour app, as well as new connected shoes, and soon to be connected headphones. The company says it's "just getting started," as it'll be making more connected apparel in the future.
No. 2: The rise in sports tech
For all of the focus on consumer fitness tracking, actual sports tracking still seems like an underserved market. There are a few companies working on run coaching, such as Sensoria, a company that puts wearables on runners' ankles to provide real-time in-ear coaching on things like foot fall, balance, pace, etc.
Only a few companies stood out in terms of serious sports tracking equipment. One of those is PIQ, a French company that makes a single wearable device with many different complementary sensors to help users with golf, tennis, skiing, and soon, many more sports. I tried out the golf version, which attaches one tracker to the users hand, and more sensors on the golf club to show swing arc, power, position, and more with real-time coaching.
Slightly more than half of the sports at the 2015 Pan Am Games had teams using some sort of wearable tracker according to Kiwi, a sports technology company, and many of those were still just the basic fitness type above. As more athletes start to get an advantage from training with connected gear and wearables specific to their sport, especially in this Olympic year, look for more companies releasing products in this market.
No. 3: Trackers for care takers
Those taking care of dependents, whether children or elderly, will be happy to see the rise in products at CES focused on making their role easier and safer. For example, the "Mother" by Sen.se is an in-home device that has multiple tracking "cookies" that can go in a user's pocket to track steps or location, on keys to let the user know when the driver has left or returned home, a pill box to alert the user when the pills have or have not been taken for that day, and much more.
There are larger healthcare companies working in this space, such as Johnson and Johnson (NYSE:JNJ), which is studying trackers that screen for atrial fibrillation information that can then be used by doctors, according to MobiHealthNews. With the amount of interesting ideas and products shown at CES from smaller companies like Sen.se, I'm excited to see what will happen if these bigger companies start putting more focus and funding into innovative solutions for care takers.
Is it too late to invest in wearables?
For investors afraid that it's too late to invest in wearables growth just because the fitness tracking wearable space is getting so crowed -- think again. The fitness tracking market still has opportunity for more innovation outside of simple wrist trackers. Then there's the wearable market for everything else from more serious sports tech to healthcare.
As the market's focus on wearables continues to rise in 2016, as it's likely to do based on the amount of focus on wearables at this year's CES, I'll be watching trends like these for more long-term investment opportunities.
Bradley Seth McNew owns shares of Under Armour and Johnson & Johnson. The Motley Fool owns shares of and recommends Under Armour. The Motley Fool recommends Fossil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.