In 2007 the consumer electronics industry was reaching a
plateau in consumer spending. Apple introduced the iPhone and smartphones
became quickly mainstream. Since then, the smartphone and tablets have
generated almost 10 years of continuous and aggressive growth and in 2013
overtook the other CE sales. But the category growth is slowing down and the
industry & analysts are expecting that will reach plateau in the coming years,
mirroring the static CE revenue.
The quest for the next big thing has started, with the
industry’s high-profile candidate to this position being “wearables”. Analysts are
predicting enormous market growth, with revenue over $30 billion by 2020.
Endeavour Partners conducted at the end of 2013 an
internet-based study that concluded that wearable devices (and more
specifically the activity trackers) are achieving mass-market status in US. The
study however revealed also the so-called “dirty secret” of wearables: most of
the devices fail to drive long-term sustained engagement for a majority of
users.
The criteria for success for any new product or service goes
well beyond initial market adoption. “Products and services that provide
utility but fail to have a meaningful impact on users’ behavior and habits --
end up failing in the market” [Endeavour
Study] In other words – the successful
products must have a certain degree of emotional attachment.
It has been argued that there are few main blockers that
need to be solved for the wearable to really take off and reach mainstream
adoption.
- They must achieve independence from the phone, being
able to provide value to the user also as standalone devices.
- They must become items of style & fashion. A
piece of wearable tech it is after all the most personal “device” we can have.
- The “killer” application is still to be found
The first two are related to hardware and design and the problem is an engineering one, well-defined, even if the solution is not straight
forward. The third one is however much
more difficult – as we are not able to yet give to engineers a specification to
fulfill.
On the other hand, the most successful wearables on the
market to-date have been the ones where the consumer value is basically
generated by the service, rather than by the hardware itself. Fitbit is the current market leader in fitness trackers. It has been the first activity tracking complete
solution (hardware+service) where the hardware might even be seen even as an
“enabler” or “accessory” to the service. An essential one, but nevertheless an
enabler.
It is a clear indication that solving item #3 and finding
value generated consumer services is essential in driving (and maintaining) wearables to mass-market adoption.
Fitbit's (and all activity tracker’s) growth is powered by
the “quantified self-trend”.
“What’s measured improves” ~ Peter Drucker
An extension of this paradigm might generate other potential
“killer” apps for the wearables – which can become tools to increase our
personal productivity.
Activity trackers - to improve our wellness productivity and satisfy our physiological needs
Payment trackers – to improve our financial productivity and satisfy our safety needs
Social trackers – to improve our relationship productivity and satisfy our love needs
Education trackers – to improve our self-improvement and satisfy our self-esteem and self-actualization needs.
The devices can collect specific domain data, track it, measure key metrics and eliminate noise to
support habit formations and goals accomplishment.
