How wearables have become unbearable for some companies
Adidas has just announced it’s exiting the wearable sector, and will no longer make smartwatches and similar devices, instead focusing on software and the development of Runtastic, which it acquired in August 2015 for $239 million, as well as on its own app.
The company is following Nike, which in April 2014, when the first serious rumors of Apple launching its Apple Watch emerged and with Tim Cook on the board of directors, dismantled the Nike Fuel Band team and exited what is clearly a very difficult market.
Wearables require hardware manufacturers to come up with increasingly precise and small sensors, along with progressively more efficient batteries, while establishing strategies to control the many demand sectors. The market share of the wearable segment grew by around 18% this year, with China’s Xiaomi the leader, thanks to a booming Chinese market that soaks up 96% of its low-price monitoring wristbands. Next is Fitbit, whose market share went from 28.5% to 15.7% over the last year, from 5.7 million units in the second quarter of 2016 to 3.4 million in the corresponding quarter of 2017, while Apple went from 13%, which in the same period climbed from 9% or 1.8 million units, to 2.8 million. Fourth up is Samsung, with 5.5%, followed by Garmin with 4.6%.
In addition to Xiaomi’s pricing strategy, we are seeing several interesting approaches: Garmin continues to target “serious” athletes, when the reality is that its enormously confusing range of products has devices of all kinds, from fashion accessories to monitors that require a doctorate to work them. Meanwhile, Apple, which initially seemed to be focusing on the redefinition of health care, now seems to be going for the gym market, following the announcement of GymKit, which combines its Apple Watch with aerobic exercise machines and allows you to put the sensors where they can best adapt to their function: measuring the tilt or speed one runs or cycles at, while the pulse and other body parameters are evaluated on the wrist.
Meanwhile, Fitbit, which Apple expelled from its stores in October 2014, seeing it as a director competitor to the Apple Watch, and that has since gone head to head with Apple, preventing users from exporting their data to the iPhone, has now acquired Pebble and Vector and launched Ionic, and seems to be focusing on US Food and Drug Administration (FDA) approval, as well as developing monitoring lines with its corporate division, Fitbit Group Health.
The company’s latest product, the Ionic, uses an oxygen sensor in the blood to detect disorders such as sleep apnea and some types of cardiac arrhythmias, and has been used in clinical studies sent to the FDA for possible approval. If it gets it, we could find devices of this type in hospitals replacing those currently used to detect atrial fibrillation. The company could focus on the detection and treatment of problems such as sleep disorders, diabetes, cardiovascular health or mental health for clients such as employers, health insurers, healthcare providers or researchers who would facilitate the devices to their employees or patients. Some US insurers, such as United Healthcare, are willing to remunerate their clients with up to $ 1,500 on their policy if they prove to be meeting the objectives set in their physical activity monitor, and it is estimated that this market could become a very active segment. The company, however, continues its downward trend in the markets, and is already trading at less than 80% of its IPO value in June 2015.
The health care segment is, without a doubt, complicated. Many people who feel healthy are intimidated by devices that seem like medical instruments: people who might not have a problem putting on a watch that can monitor practically the same type of parameters and variables but which is sold as part of their sports activities. Apple, for its part, continues to make progress with medical research teams, providing apps for research through HealthKit, while inviting iPhone and Apple Watch users to provide their data.
The FDA has created a pre-certification for these types of hybrid devices, and Fitbit and Apple, as well as Johnson & Johnson, Samsung, Roche or the science division of the Alphabet’s healthy unit, Verily) are participating in its development. Soon, many of the parameters we learn about only after a visit to the doctor or hospital will be regularly monitored by apps, and our wearables will alert us when something may be going wrong. Before then, the main players in this segment will have to tough it out.
(En español, aquí)
