Smart Wrist Wear is a Market in Its Infancy

The consumer wearables segment continues to emerge as a high-volume device category, exhibiting high-growth relative to other consumer electronics segments. The volume device market to date has been almost exclusively fueled by vigorous consumer take up of fitness bands and early mainstream adoption of smartwatches. At Strategy Analytics we believe that wrist-worn wearables will continue to dominate the category through 2020.

Global wearable sales roughly tripled from 2014 to 2015, and SA forecasts 75% of global wearable shipments in 2020 will still be wrist-worn wearable tech.

Yet even through the end of the decade smart wrist wear will be a market in its infancy. It will only hint at its true IoT-driven potential to deliver bio and enviro-sensor data to solutions that will range from real time monitoring to predictive/prescriptive analytics.

Beyond smartphone companion and today’s fitness apps, we believe an era of continuous data flow from wearables and the ability to respond to patients based on biotelemetry will emerge. In time, it will be as transformational to Healthcare as the ATM was to banking. Privacy issues loom large but will be overcome in time as they are outweighed by benefits that are too dramatic to ignore.

Segmented Offerings for a Segmented Market - For Now

As in phones, I am convinced smart wrist wear will one day achieve an ‘iPhone moment’ when a single design will offer enough processing power, connectivity, user-friendliness, ecosystem maturity, style, miniaturization, durability, battery life and accurate sensors to have 80%+ of the TAM (Total Addressable Market) aspiring to own.

(Note the Apple Watch is not such a device, and that Apple will be the one to achieve this is anything but certain)

As the market takes shape and a single ubiquitous wearable design for the wrist is some years off, players will continue to approach the wrist from their respective corners, playing to a highly segmented market with highly segmented offerings.

Fitness band vendors and smartwatch makers (particularly Apple) are fully aware of how crucial advances in biosensors are to the future of their products. In separate camps today, these volume players will lead the charge towards a prevalent converged form factor that balances biosensors with other key selling attributes.

Consumer & FDA-Approved Roadmaps Will Take Time to Converge

Purveyors of regulator-approved medical bracelets, and to a lesser extent, smart jewelry/bracelets are also vying for position. For Healthcare grade wearables sold to the mass market, vendors will necessarily take a no-compromise approach to product R&D that prioritizes FDA-compliant accuracy and reliability in measuring FDA-defined medical ‘endpoints’ (real or surrogate). These are table stakes to get their devices funded by VC’s and covered by insurers.

There are very separate and distinct target markets of consumer and medical-grade wearables that exist today-- and this puts the differences between their business models and product development roadmaps into incredibly stark relief.

Today, the consumer design cycle, budget, physical size, and feature set are very much at odds with medical measuring devices and their protracted lead times and stringent regulatory testing phases.

In Healthcare, ergonomic breakthroughs in dedicated wearables coupled with advances in biosensors will bring patients unprecedented levels of medical-grade accuracy, convenience and mobility. This will pave the way for the scale economies needed for the biosensor IP to be transitioned to mass market wearables for broader adoption.

In the interim, biosensors offering less than medical-grade accuracy for select biometrics will, in tandem, continue to achieve volume penetration in more cost-conscious fitness band and smartwatch markets. Unfortunately, opportunities to leverage certain sub-medical grade biometrics will be limited since regulators such as the FDA hold certain biometrics to medical standards while overlooking others. 

Our new report "Biosensors: Taking Wearable Tech to Its Maximum Potential" explores these issues in depth, and forecasts penetration of the most critical biosensor technologies in wrist worn wearables through 2020.