IoB Insiders – Rob Bamforth, analyst at Quocirca, discusses the challenges facing the wearables market, and why he believes devices with a strong use-case story will still do well.
Some of the recent negative news about smartwatches might have given the impression that the wearable bubble is beginning to burst. Sales are not booming. Platforms have been delayed. Suppliers are failing. Wearables certainly does not look like a market poised on the brink of ‘hockey stick’ growth.
There are specific challenges in the smartwatch sector: the presence of a dominant player like Apple; odd expectations of wrist devices, driven by popular culture from Dick Tracey to Douglas Adams; and the fact that for many, smartphones have replaced watches to become the primary timekeeping devices. Fitness devices have filled the gap left on the wrist, but even their appeal is not necessarily long-lasting.
A major challenge (especially for those trying to monetize the opportunity) is that the value chain for what are essentially ‘companion’ devices is very different to the ‘personal computer’ model. The wearable ecosystem has more players and more interdependencies. Making money from the sale of standalone apps is not really the approach and so a more complex sales or partner model is required.
Where there is a strong proposition, the wearable concept does very well.
However, as with much of the opportunity landscape from connecting any and every thing to a universal network (IoT & wearables both in this similar space), the end business value lies in very specific use cases, not the all-embracing platforms needed to support them.
Some thought that after the consumer-to-business growth of all-app-embracing smartphones, through to tablets, that a wearable replacement would easily follow with similar success – hence the interest in a consumer smartwatch. The new universal device has thus far proved elusive, but perhaps in time, smart augmented reality glasses might find traction.
Sector specific applications, tailored wearable devices and narrow use cases are, however, a completely different matter. There are plenty of opportunities to use innovative products as part of compelling solutions to real problems today. But with wearables, just as with IoT, those seeking instant volume and massive scale without significant effort may be disappointed.
Use cases that solve real problems typically require much more than the wearable or connected gadget. These will be companions or subservient devices to gateways, requiring secure and authenticated connectivity and relying on other services and platforms to deliver the application. The wearable device at the edge is simply the sensory data gathering portal into a whole world of IT integration and technology. The real money is elsewhere.
Building the business case involves building the supporting ecosystem, and this is often not the forte of smart gadget builders, or even the carriers and telecoms companies that connected them to a network. Integration is the key, and while large systems integrators could tackle this, they are often not the first to lead. More specialist and boutique integrators tend to understand the specialist technical challenges as well as the commercial drivers for particular problem sets.
It might be the assurance of commercial refrigeration temperatures, time lost by mis-directed field operatives, changes in an individual’s health condition or the micro-nuggets of extra performance that make a difference in sports. They may also be aware of where technology innovation could be a catalyst for business changes that have broader impact; live monitoring of skin temperatures, head up displays augmenting reality, dynamic noise cancellation.
Monitoring, assurance and accuracy
These use cases will often be far less headline-grabbing than the mass potential deployment of cool tech like drones, virtual reality or shiny smartwatches, but they will make a difference. More than likely, the routine processes that require monitoring, assurance and accuracy in sectors such as manufacturing, maintenance and healthcare, will be great candidates.
Some will start out as smart clothing for challenging environments such as equipment for athletes and military apparent and ripple across into other mainstream uses just as Formula 1 car technology eventually percolates into everyday runabouts. Others will start out as premium products for sectors where users are willing to pay for something different, such as entertainment and gaming. For enterprise use, the provenance of the concept does not matter. The key is to find the sweet spot where the price/complexity of the total solution drops below the total value of the solution.
Rather than starting with the wearable devices, the key to a solution for businesses will be making use of new data. Understanding of the processes affected or potentially enhanced will be vital, and it is here that getting an integrator with the right business skills is critical.
This on its own is not enough. For a solution oriented around wearable devices (or the IoT for that matter) to scale beyond a pilot project or conceptual science project requires technical skills that essentially ‘productize’ integration and installation. Look for those able to deliver ‘zero touch’ deployment or ‘one-click’ integration in order to have solutions that scale.
Few organizations have the right combination of technology and sector specific business acumen. It has less to do with brands, scale and market presence, and much more to do with passion, individuals and flair. They may be hard to find, but they will be worth it.