March 19, 2014
A journalist called and asked me today about the market size for wearables. I replied, “That’s not the big story.”
So what is? It's data, and what you can do with it.
First you have to collect the data and have the permission to do so. Most of these relationships are one-to-one. I have these relationships with Nike, Jawbone, Basis, RunKeeper, MyFitnessPal and a few others. I have an app for each on my phone that harvests the data and shows it to me in a way I can understand. Many of these devices have open APIs, so I can import my Fitbit or Jawbone data into MyFitnessPal, for example.
From the story on 9to5mac.com, it is clear that Apple (like with Passbook) is creating a single place for consumers to store a wide range of healthcare and fitness information. From the screenshots they have, it also appears that one can trend this information over time. The phone is capable of collecting some of this information, and is increasingly doing so with less battery burn due to efficiencies in how the sensor data is crunched, so to speak. Wearables – perhaps one from Apple – will collect more information. Other data will certainly come from third-party wearables – such as fitness wearables, patches, bandages, socks and shirt – and attachments, such as the Smartphone Physical. There will always be tradeoffs between the amount of information you collect and the form factor. While I don't want to wear a chubby, clunky device 24×7, it gets better every day.
There is also the aggregation of the data to consider. Many of these relationships see a very small amount of data. Nike can see my steps. Basis can see my steps and heart rate. MyFitnessPal sees what I eat. No one entity has a holistic view. Separately, it is not clear that a single entity would even know what to do if it had all of this information about one person. How to use it? How to monetize it? How to monetize it in a way that doesn’t jeopardize the very trust and privacy a product has earned? What utility can an entity provide back to a consumer to warrant the aggregation of so much data?
Apple isn’t alone in its desire to aggregate information about its users. Google, Facebook, Amazon, and others have the same desire. Health and fitness data is one of the new frontiers. Apple is likely counting on the fact that consumers will trust it with their data. And Apple has proven trustworthy in the past. The question that I don’t see answered for consumers with the leaks is “what utility the consumer gets i return. Simple storage of the information in one place doesn’t cut it. This would be in alignment with the current Passbook product. Data and data aggregation are just a couple of pieces in a much larger puzzle. They are likely pieces in a 3-5 year product roadmap but for what product or service?
Finally, data alone falls short – even if it is trended. The real prize here is in solving the healthcare crisis in the US by lowering the cost of care and creating healthier citizens. (As an aside, there are not enough thirty to forty or fifty something’s who are concerned enough about the quality of their lives today or in their outer years to put much effort into healthy eating and living. That’s why the US is facing a crisis. Wearables will scale when our insurance companies buy them for us and pay us to wear them. We care about money and healthcare is expensive for most of us.) To be effective in moving the needle on consumer behavior and capturing the real prize, you need effective engagement tactics. This is where mobile phones play a role. You need to spur consumers to plan, act and reflect. We call this a mobile moment, and it is indicative of consumers going through the mobile mind shift. Engagement tactics on mobile phones help consumers make better decisions – they help consumers make 100 better decisions each day about what to eat and whether or not to walk or take the bus to work that add up into healthier habits and lifestyles. Engagement tactics include community support, coaching, competition, gamification, etc., which I detail in this report.
As for wearables, you can find a forecast for the number of type-A, upper middle class and affluent fitness nerds who want to record every run, swim, bike and trip to the gym. They’ll pay $100 to $200 per device. It’s probably nothing compared to what they have already spent on running shoes, biking shoes, gear, a swim or gym membership, a bike, a helmet, you name it. Running shoes alone cost $100 to $200 and they wear out in 90 days. My “left and right socks” cost $15+/pair. A wearable device costs no more than the average pair of sneakers, cell phone or pair of jeans that the average teenager is wearing.
The hockey stick in this market will come when insurance providers – or employers who are self-insured – begin to reimburse members for healthy habits. There are two missing factors today:
1) Consumer motivation. Saving money will motivate more consumers than simply being healthier.
2) Convenience. As my colleague James McQuivey says, the benefits of a new product or service must outweigh the inhibitors to drive adoption and usage. The inhibitors today include: cost (for some), battery life, complexity of set up and use, poor interfaces, data transfer, need to own a smartphone, downloading the apps, interpreting the data, and making hard decisions. The benefits are growing in number. Some of us are motivated by healthier living or competition.
This is the side of the equation that needs to grow – there need to be more benefits for consumers.