Collapse or consolidation? The wearables market and what you need to do next

There’s no hiding it. The wearables market is looking shaky right now. In the fourth quarter of 2017, two major players, Fitbit and Xiaomi, shipped 17 percent and 5 percent fewer devices worldwide than the equivalent period in the previous year.

In fact, the wearables market only grew by 8 percent thanks to the Apple Watch topping the charts with 8 million sales, up from 5.1 million.

The outlook for 2018, so far, isn’t much rosier. While wearable shipments increased by 12 percent in Q1, that represents a slow down compared to the 18 percent year-on-year growth managed in 2017. Plus, with Fitbit’s stock price bombing; Misfit’s sale to Fossil; Jawbone and Moves dead, along with a host of other names you never even got to hear about; and Withings wobbling since getting sold to Nokia and then sold back again, the picture looks even worse.

Is this collapse or consolidation, and for consumers looking to sign up to a healthier lifestyle and for hospitals wondering how and when to invest in wearable devices for their patients, what are we supposed to do next?

Race to the bottom

“From a health and fitness wearables perspective, we’re at an interesting crossroads,” says James Stables, co-founder and Director of leading wearable technology website, Wareable.

“We’ve had a race to the bottom in terms of the functionality of fitness trackers and people are fed up with the standard features which you can get pretty cheap now. Fitbit has eaten up that market bar Xiaomi who are operating at the other end.”

Little wonder then that the smaller fitness band players somewhere in the middle have all but disappeared but there isn’t much more heterogeneity in the smartwatch market just beyond, which itself is picking up in popularity. Dominated by the Apple Watch, these smartwatches have integrated those same features which were once unique to the simpler fitness trackers. The end result is a bigger squeeze at the bottom.

“If you look at the two biggest wearable markets,” continues Stables considering the trackers and the smartwatches, “each has become dominated by one major player and one of them has started to cannibalise the other. So, I think we’re in a holding position where there’s no no new sensor data coming through, people have got their fitness trackers and are replacing them when they break or they’re losing interest. That’s why we’re seeing fewer companies and higher profile companies struggling because they’re not cut out to compete with Apple and Fitbit.”

The Apple effect

“The Apple Watch is one device that seems to be immensely popular despite wearables faltering elsewhere but part of that popularity means that it’s also sucking in every feature of everyone else’s device. It’s taken a big chunk out of Fitbit and now it’s taking a chunk out of Garmin because it’s a pretty good running watch too. It really is the one singular device that everyone needs so long as they’re willing to use an iPhone.”

So says Stables, and therein lies hope that this period of consolidation will perhaps cause few more casualties because Apple will always give competitors room on price. Apple hogs the mainstream but not everyone can afford a $330 smartwatch and not everyone can afford the even more expensive iPhone you need to get it to work. And hospitals certainly can’t be dishing this kind of luxury kit out to their patients willy-nilly.

After a false start with the Ionic smartwatch, which performed worse than expected for sales due to its similar pricing to Apple, the $200 Fitbit Versa is filling that more affordable space very nicely while focusing on the more health side of wearables as opposed to fitness. Its Female Health tracker feature is a case in point.

The other natural challenger to Apple is, so far, sadly all but absent, according to Stables.

Where’s Google?

“Google has really dropped the ball. Bear in mind that the iPhone is only around 30 percent of the smartphone market at the moment. There’s no cohesion around the Android Wear OS experience. All they’ve managed to do in the last two years is change the name of the OS. They’re not bringing in any new features. They’re not helping the likes of Fossil. Fossil is actually doing a really good job but it would be doing a lot better job if Google could create an OS that got people really hyped up.”

Google’s attempts at a quality smartwatch operating system have been disorganized, as usually happens when you don’t have control over the hardware on which your software is supposed to run. While Google has been stumbling, in the same time frame, Apple has become a wearable super-power, as Stables attests.

“The Apple Watch started off quite poor but has grown into a really, really great device. If you look at what it was with no GPS, a crap battery, no third-party access to the device sensors compared to now, the difference is staggering. Now, with watchOS 5 launching in September, there’s cadence sensing for running, advanced heart rate, the breathing training, VO2 max, exercise detection, resting heart rate measurements and that’s just the sports side. Then there’s all the fitness, wellness, walkie-talkie features and smartwatch features. It can tell you’re going to have a heart attack before you have one, and they’re the only smartwatch manufacturer to have LTE connectivity and sign up working really smoothly.”

Medical wearables and other specialists

While the Apple Watch is fantastic running watch, it’s not got the battery life to get you through a 48-hour ultramarathon. Garmin has. Now, while slogging it out over two-days on rough terrain is not everybody’s idea of fun, what we’re saying here is, that just with price, Apple leaves room for specialist wearables too. Even if Garmin itself took out everyone else in the sports wearable space, most notably the very worthy TomTom range, Garmin is still the choice for triathletes of all persuasions and it’s not likely that Apple will try to snatch the hardcore end of that.

Similarly, the medical wearables space is under no threat from Apple either. Johnson & Johnson, iHealth and Omron are in no danger of clinical-grade blood glucose trackers or blood pressure monitors arriving from Fitbit any time soon; certainly not for the moment.

Even if one did turn up in the consumer stream, the process of getting medically certified is slow, expensive and probably too much so for a fundamentally consumer focused company to bother with.

Either way, for the time being, the global market for medical wearables is on the up. Valued at $6.22 billion in 2017, it’s predicted to have a compound growth of 18.3% to take it up to a healthy $14.4 billion by 2022 with sales in the US set to rise from 2.5 billion units to 8.7 billion.

Also, unlike fitness trackers, the medical wearables space is far from saturated. There is no one big market hog threatening to suck up all the sales and, with new and specialised sensors in development, there’s every reason to think that it will be a sector able to support itself and stave off cannibalisation by the mainstream.

Of course, if not correct, we do at least appear to have a vision of the future by looking at the consumer device space which the medical market could be shadowing a few years behind that same curve.

So, which wearable should you buy next?

The key situation to avoid — whether you’re a patient looking to get on a health and fitness kick or a hospital investing in a remote patient monitoring program — is the one where you end up buying into an ecosystem that goes out of business.

What’s left in the fitness tracker space with Xiaomi and Fitbit seems safe enough, despite the recent downturn, given Apple’s pricing structure.

Apple Watch is, of course, headed nowhere but up. So, it’s a safe call for those that can afford it and it’s a device that’s only going to get better.

As for the dedicated medical wearable space, it looks safe to buy into one of the major players but judging by what we’ve seen both in the mainstream and in sports, you need to back the right horse.

Omron or Johnson & Johnson would make a sensible choice and have enough at stake in terms of reputation to make them accurate and trustworthy as well. They should see you gathering quality data and prevent any need to port all your information over to another platform with these players unlikely to go bust. They’ve also been making these devices before anyone was calling them wearables, and are set up to integrate with technology companies to help move that data into the EHR. Beyond that, what you need to look for before nailing your colors to the mast is signs of life. There’s no one key marker but it’s about recent news and announcements from the wearable divisions of these companies.

• Are they releasing new APIs?
• Are they updating device firmware?
• Are they updating their software platforms regularly?
• Is there news about new sensor developments?
• Any new products in the pipeline?

Of course, if the answers to these are ‘yes’ then it’s all going well. As well as the negative responses possible warning signals would include:

• Price structure changes on services; eg: features that used to be free becoming freemium
• Consistently poor product reviews
• Product recalls
• Company mergers

None on their own necessarily spell doom but they’re all pointers. Read the news, if too many lights start flashing, then that’s a wearable company best avoided, and if you’re tempted by the early adoption of a brand new wearable, you might want to think again unless it’s got a revolutionary and validated new sensor inside it, and, even if it does, it’s only a matter of time before one of the big players moves over to eat it up.