ANALYSIS Nokia announced this week that it is closing its Digital Health division, in the wake of a February 2018 memo, published by the Verge, which revealed that there was no way forward for the division.
“Rather than only falling in love with our technology, we must be honest with ourselves,” wrote chief strategy officer, Kathrin Buvac. “Currently, we don’t see a path for [digital health] to become a meaningful part of a company as large as Nokia.”
Unsurprisingly, her comments were seen as heralding the closure of the division.
In 2016, Nokia’s €170 million purchase of French company Withings allowed it to bring a range of branded wearables to market, along with other devices, such as connected scales. However, the deal didn’t prove healthy for either partner or their customers, with a write-down of the entire cost of the deal last autumn. In effect, the technology will now revert to Withings, with founder Eric Careel buying back the portfolio.
No sign of recovery
The news comes at a challenging time for the wearables sector.
On the one hand, their health applications are growing, with Internet of Business reports revealing that links between AI and popular wearables, such as the Apple Watch and Fitbit, are enabling the early diagnosis of a range of medical conditions, includings heart problems and diabetes.
At the same time, specialist sensors are being developed to monitor diet, skin problems, stomach complaints, and more, and to help injured athletes recover faster. The message is clear: wearables offer windows into the wearer’s health, fitness, and lifestyle that have never been possible before, along with the ability to manage those aspects of their lives.
But on the other hand, even the hardware market leaders are struggling to turn the concept into a sure-fire commercial hit.
Fitbit: not so fit
Earlier this week, Fitbit announced a healthtech partnership with Google. It also recently acquired health coaching platform Twine Health, a move that allows it to help those living with conditions such as diabetes and hypertension to manage them better.
However, Fitbit also announced its Q1 2018 results this week. These reveal that revenues fell by 17 percent, in line with analyst expectations, with net losses deepening to $41 million, from a Q1 2017 loss of $34.4 million. Most worrying is the fact that the company sold just 2.2 million wearables – 800,000 fewer than in the same period last year.
And these are results from the number two player in the market.
Apple: looking shiny?
Over the year, 2017 sales of all wearable devices were up by 10.3 percent year on year – good news, but hardly a stellar performance. However, the previous year’s sales saw an increase of 27.3 percent, according to IDC. This suggests that the market is cooling.
By far the biggest growth came via China last year, where Huawei increased sales of its own wearables by over 93 percent year on year – albeit from a much lower base than the market leaders.
That market is currently dominated by Apple, whose Apple Watch sales accounted for 61 percent of all smart watch sales in the last quarter of 2017, according to IDC figures. CEO Tim Cook has suggested that much of the platform’s own double-digit year-on-year growth is being driven by health and fitness applications.
So where does all this leave us?
Internet of Business says
While the wearables market is still alive and kicking, the underlying trends suggest that there is a creeping malaise in the sector – at least from a hardware perspective.
The expensive Apple Watch has been a modest hit by iPhone standards, but Apple itself is standing on a shrinking platform. Despite Apple’s analyst-confounding financial results this week, 86 percent of mobile devices now run on Android, rather than iOS.
In short, Apple may have defined the mobile market with the iPhone and iPad – as it did in the early years of desktop GUIs with the first Macs – but not licensing the technology (again) has left the company’s walled garden withering in Google’s heat, despite Apple still being the world’s most valuable company.
As a result, it has to keep innovating to thrive – as it may be doing with a rumoured range of wireless AR/VR devices. Health may have a role to play in the journey ahead, but only among dozens of other applications.
Meanwhile, number-two wearables player Fitbit’s lower-cost, friendly devices are perhaps the definitive Christmas gift that is soon abandoned, and the company is now facing aggressive competition from Chinese players, which may offer broader functionality at lower prices.
But at heart, the health wearables market is really about three things. First and second are the apps and the data, not the platform; in this sense, Google would seem to hold most of the cards, while professional applications of wearable technology in the health and social care system have an obvious, exciting future. Amazon sees a role for itself there, too.
The UK government recently announced a new focus on technologies such as AI and robotics in the NHS.
But the third thing is much harder for providers to work around. Athletes and fitness fans may happily sport dedicated wearables to monitor their exercise and diet – along with anyone who is recovering from illness or an operation; but most people don’t want to be reminded of their own mortality 24 hours a day.