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The Coming Crack-Up in the Wearable Electronics Market

Posted by Jon Melnick on Aug 10, 2015 12:10:51 PM

When we look back eight years to the introduction of the iPhone, it is easy to see the disruption smartphones caused; from transportation to on-demand services to social media. The big question today is what (if any) disruption will wearables cause? Improved healthcare? Quantified self? Connecting with customers? Gathering consumer data? Making safer and more efficient employees?

Wearable electronics have come a long way since their less-than-noble origins as a way to beat the house at roulette. However, today’s wearable electronics landscape consists of a huge amount of disjointed activity as literally hundreds of devices litter the market. Wearable developers are placing their bets in specific areas, and our survey of over 450 wearable devices showed that consumer communication and consumer health garner the most development attention.

While these larger market trends emerge with promise and a robust field of competitors, companies seek differentiated niches. Take, for example, HP’s wearables play. Initially designed to provide remote technical support to industrial printer customers, HP had added smart glasses to its MyRoom platform to enable remote employees to quickly engage with subject matter experts (see Figure 1). For example, EMTs can connect with doctors, who are able to see what the EMT sees and communicate information to help the EMT stabilize the patient.

It is easy to assume that wearables will follow a similar course to mobile phones, given that current wearables pair with mobile devices. What's more, many high-profile wearables devices take a one-size-fits-all approach, like the Apple Watch and Samsung Gear 2 (not to mention that these top wearable makers are also the market leaders in mobile phones). However, this situation is likely to change as wearables mature. Take for example, the patent portfolio of Apple and Samsung (see Figure 2). Despite their similar smart watches, Apple has developed its hardware portfolio around consumer communication, which accounts for 43% of its overall portfolio, compared to just 10% of Samsung’s. Meanwhile, Samsung has devoted 28% of its portfolio for health monitoring, compared to only 10% for Apple.

Expect wearables to inherently be a more fragmented market than other consumer electronics. Clients should be prepared to develop a broader range of products and channels to market, and expect disruption from wearables in a broad (and unexpected) range of industries and markets too.

Q3 2015 LQ Wearables

 

For more on Lux’s research on wearable electronics, contact Jon at jonathan.melnick@luxresearchinc.com.