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Wearable Tech Market Set to Grow But Needs a Must-Have Device

INITIAL REPORT David Franklin, df@blueshiftideas.com

Summary of Findings

The wearable technology market is the natural evolution of

computing and will continue to grow during the next two to 10

years, according to 38 of 41 sources. Sources’ growth estimates

varied widely and ranged from $1 billion to more than $50 billion

by 2018. Health/fitness devices and applications are the wearable

tech market’s current growth drivers, but smartwatches, medical

and enterprise apps, data management, data analytics and textiles

are expected to be future catalysts.

Wearable devices’ real value is in the data. Collection, security,

privacy, management, aggregation, analytics and monetization are

all backend operations that require expertise. NXP Semiconductors

N.V. (NXPI) and Atmel Corp. (ATML) already provide sophisticated

sensor hub technology for data collection and communication.

The wearable tech industry is highly fragmented and serves diverse

and niche markets. Many consumer devices appear to be solutions

looking for a problem. Sources discussed 82 companies as being

industry stakeholders. (See list.) Those winning in the wearable

space are just as likely to come from the chip, sensor and data

management/analytic side as from the end-user device side.

Apple Inc. (AAPL) is expected to become a wearable technology

market leader. Sources overwhelmingly identified its upcoming

Apple Watch as a device that will shape the wearable tech market.

Google Inc.’s (GOOG/GOOGL) Google Glass has many critics in the

consumer market but is gaining acceptance in the enterprise and

medical segments. One industry specialist source expects nine to

10 new smartglass products to be introduced this year and 1

million units to be shipped by mid-2015. Google likely will secure

70% to 80% of this market.

Other likely winners are InvenSense Inc. (INVN), Fitbit Inc., Misfit

Wearables, Jawbone, Samsung Electronics Co. Ltd. (KRX:005930),

ARM Holdings PLC (ARMH), Intel Corp. (INTC), Texas Instruments

Inc. (TXN), Broadcom Corp. (BRCM), Freescale Semiconductor Ltd.

(FSL), NXP Semiconductors NV (NXPI), Qualcomm Inc. (QCOM),

Bosch Ltd. (BOSCHLTD), Kionix Inc. and Xiaomi Inc.

The lack of a must-have device or app is impeding widespread

adoption of wearable technology. Other issues include security and

privacy concerns, the limited value proposition for the user, the

need for more meaningful contextual data and improved sensor

technology, poor device durability and battery life, and

unfashionable designs.

Research Question:

Who will be the winners and loser in wearable technology as consumers either flock to

these products in the next few years or its market potential is overblown by hype?

Silo Summaries

1) Technology Company Executives Fourteen of 15 sources expect the wearable technology

market segment to experience significant growth during

the next two to 10 years. The expansion and adoption

of wearable tech are the natural evaluation of

computing. However, a must-have device or app has

not yet emerged. Sources’ growth projections varied

widely, but they agreed that that the health and fitness

segment will drive wearable sales. Fifty-seven different

companies ranging from startups to traditional

technology and electronics firms were discussed as

having a stake in this market.

2) Industry Specialists Five of six sources expect meaningful wearable

technology market growth during the next three to five

years. One source said Google Glass interest among

consumers has stalled, another said enterprise

applications for smartglasses are on the rise and that

Google Glass will have 70% to 80% of the market, and a

third said sales of activity and fitness bands have

plateaued. Market categories expected to drive

wearable device growth include health and fitness,

medical, watches and enterprise applications. The

market is highly fragmented; more than 40 companies

were discussed by these six sources.

3) Wearable Tech Retailers Three sources representing national sporting goods

retailers and six representing national tech retailers

expect sales of wearable devices to grow further. Fitbit,

Nike and Samsung are the current sales leaders, but

Apple is expected to dominate once it releases its much

anticipated smartwatch. The wearable technology

market is fragmented, with sources mentioning 15

companies that have a stake in the space.

4) Wearable Tech Users and Online Consumer

Survey Seven Fitbit, two Pebble, one Basis (Intel) and one

Jawbone user made up these 11 sources. Blueshift also

provided data from an online August survey of 1,029

consumers. Ten of 11 wearable tech users expect the

market to achieve widespread adoption in three to 10

years. Fitness and health-related apps and devices are

expected to drive sales. Excitement for Apple’s entrance

into the wearable industry is high; sources expect the

company to be the industry leader. Likewise, survey

respondents believe Apple’s entry into the wearables

industry will hasten and promote adoption. Companies

making sensor components and working to reduce

battery usage will come out ahead as well.

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Wearable Technology

Background

Wearable technology products date back to the 1960s when inventors designed a wearable device to help them cheat at

roulette. Wearables have evolved significantly since, as today’s early adopters await innovative wearables with connectivity

capabilities. Experts and analysts greatly differ on the potential market size and have published estimates ranging from $3

billion to $50 billion by 2018. Meanwhile, Morgan Stanley forecasts $17.5 billion in sales for Apple’s Apple Watch in its first

year, which if correct, would be half the volume of the entire global watch market.

Large multinational conglomerates, small pure-play companies such as Kopin Corp. (KOPN) and individual entrepreneurs are

hustling to become the next wearable tech trendsetter. Google Glass and the Apple Watch lead the herd in recognition, but

other wearables that exist or are expected to soon enter the market include the smart hoodie, Facebook Inc.’s (FB) Oculus

Rift, Samsung’s Gear VR, IK Multimedia’s iRing, Garmin Ltd.’s (GRMN) golf watch, medical monitors, smart tattoos, Novartis

AG’s (NVS) contact lens with embedded electronics and a behavior-modifying shock wristband. Companies that stand to gain

regardless of who wins the device race are the component producers of wearables, such as NXP Semiconductors and

InvenSense.

Still, many industry experts question the viability of wearable devices gaining mainstream acceptance. Currently most

wearable products are marketed to the fitness crowd and contain the same standard features of heart rate monitoring, stride

count and total distance. Another barrier to wearables’ acceptance is their lack of aesthetic appeal. Saturday Night Live, The

Ellen DeGeneres Show and The Daily Show have spoofed the Google Glass, alluding to its invasiveness and ugliness. Google

has responded by teaming up with designer Diane von Furstenberg to introduce a line of designer Glass frames. A third

challenge is that users often become quickly bored of their wearables; a recent report found that users of activity-related

wearables like Fitbit and Jawbone abandon their devices after just six months.

As expected, Apple jumped into the wearable tech market with its Sept. 9 announcement of the Apple Watch, which works in

conjunction with several iPhone models. The industry is hoping that even just the anticipation of this product will broaden

adoption of smartwatches and bring wearables into the mainstream.

Current Research Blueshift Research assessed whether the wearable technology market would continue to grow and which companies would

be the winners and losers. We employed our pattern mining approach to establish five independent silos, comprising 41

primary sources, an online survey of 1,029 consumers, and seven secondary sources focused on the wearable tech industry:

1) Technology company executives (15)

2) Industry specialists (6)

3) Wearable tech retailers (9)

4) Wearable tech users and online consumer survey (11 tech users, 1,029 survey respondents)

Wearable

Tech Market

Apple Will Be

Leader

Must-Have

App Available

Technology Company Executives

Industry Specialists

Wearable Tech Retailers

Wearable Tech Users

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Wearable Technology

5) Secondary sources (7)

Next Steps

Blueshift Research will assess the pending launch of the Apple Watch and its effects on the wearable technology market. We

will research which products are being purchased and consumers’ satisfaction levels with those devices. We also will review

wearable technology in terms of enterprise applications. Finally, we will monitor the market for a must-have device or app.

Silos

1) Technology Company Executives Fourteen of 15 sources expect the wearable technology market segment to experience significant growth during the next two

to 10 years. The expansion and adoption of wearable tech are the natural evaluation of computing. However, a must-have

device or app has not yet emerged. Sources’ growth projections varied widely, but they agreed that that the health and fitness

segment will drive wearable sales. Fifty-seven different companies ranging from startups to traditional technology and

electronics firms were discussed as having a stake in this market. Frequently cited device companies with the potential to win

were Apple, Google, Fitbit, Samsung, Jawbone and Misfit. Meanwhile, Intel, Broadcom, Texas Instruments, Qualcomm,

Freescale, NXP, InvenSense, Bosch, Kionix and Atmel could emerge as chip and sensor leaders. Sources discussed the need

for wearables to move beyond being a smartphone on the wrist or in glasses. Wearable data, management and analytics

must improve in order to offer users more valuable and usable information. Challenges facing the wearable industry include

overcoming data security and privacy concerns, providing meaningful data analytics and increasing the value to the user.

KEY SILO FINDINGS Wearable Tech Market Potential

- 14 of 15 expect the wearable market to continue to expand during the next 2 to 10 years.

- Dollar projections for the industry ranged from $1 billion to $50 billion by 2018.

- Health and fitness devices and apps are expected to drive growth and adoption.

Wearable Tech Winners and Losers

- 57 different companies were discussed as having a stake in the wearable space.

- Apple, Google, Fitbit, Samsung, Jawbone and Misfit were most frequently mentioned as winners in the device space.

- ARM, Intel, Broadcom, Texas Instruments, Qualcomm, Freescale, NXP, InvenSense, Bosch, Kionix and Atmel are

expected to perform well in the chip and sensor segment.

Miscellaneous

- Headwinds include the lack of a must-have device or app, security and privacy concerns, and a limited value

proposition for the user.

1. Hardware product manager in Boston

A major barrier to wearables stems from consumers’ resistance to behavioral changes. Adopting new technology comes

at a cost, and the benefits that wearables offer may not be high enough yet. The nature of product development teams

will need to change as user experience becomes more important. Tracking sleep cycles will become a de facto feature,

but food intake tracking holds the largest potential. Hardware is making a comeback.

Wearable Market Potential

“I understand where that range variation of $3 billion to $50 billion [in wearable tech market potential] might come

from. There’s a sense that technology still has to turn a corner in order to really meet the full potential. The full

potential number is probably $50 billion-plus. For me, it’s more of a ‘when’ question. Are you going to hit that

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Wearable Technology

number in four years, or is it going to take longer for the technology to mature? Or for our cultural biases and

expectations to adjust? I think that’s harder to answer. There is going to be a point in the next 10 years where it’s

going to be both a $3 billion and a $50 billion market.”

“Widespread adoption will probably take closer to 10 years than three. I think part of the rationale is that a lot has to

go right for it to really be valuable. I think there are elements of what wearables are able to provide people right now

or how it’s framed, where there’s a little bit of a mismatch in terms of what will really be valuable. There’s a

difference between providing data and providing new experiences that’s pretty drastic. I think we’re still mostly in a

data world in terms of what wearables are providing us. The user experience really needs to improve. Then a larger

company needs to be taking a stand and put out a product that people will adopt at a high rate.”

“I haven’t seen any of the big players put out a product that seems like it’s going to be a winner in the next couple of

years. It seems like Google Glass hasn’t been able to put out anything that really grabs people.”

“For early adoption segments, fitness has obviously been a strong one. A lot of people have been talking about the

professional fields, whether it’s medical or industrial applications, where you can start to augment in more niche

careers or industries. Both of those will be earlier drivers, but until you get something that is applicable to wider

aspects of life, I don’t think you’ll see a real success story coming from one market segment.”

“Absolutely, you see users toss aside their devices, everything from the

Fitbit situation to a very practical aspect. … I actually ended up getting a

Pebble at a developer hackathon event. After a week of misplacing the

charger—and it’s such a customized charger so it’s really difficult to get a

replacement—there was sort of no driver for me as a user to want to use it. I

probably only used it for a week or so. It was very easy for me to walk away

from it.”

Wearable Tech Winners and Losers

“The Basis watch guys [acquired by Intel] have some really interesting tech.

There’s some challenges with the design side. They’re aware of that. As a

company, they at least get what their strengths and weaknesses are.”

“People are talking about the fashion industry, but that feels like too big a

leap for me. It’s sort of a functionality and form bias for me. Even the idea of

a smartwatch feels sort of anachronistic to me. Why would a watch be the

obvious place to have an interface? It’s sort of an awkward place to have to

look and doesn’t fit in with existing behaviors.”

“The place that seems more exciting is integrating wearable technology into

the things you already do. Reebok [Adidas AG/ADDYY] or Under Armour

[Inc./UA] may be moving in on this: integrating wearable tech into athletic

wear that measures your muscle workout.”

“I hate to write off anyone. I haven’t loved what Samsung’s put out so far. I’ve actually been even more disappointed

in Pebble.”

“I know Jawbone’s reputation has been battered around a little bit. I’ve heard mixed things about the UP. Technology

is going to drive a huge part of it. Sleep measurement is sort of a dividing line, specifically in the health and

fitness/wellness space. Being able to detect sleep is something that consumers notice. I imagine at some point, that

measurement is going to be de facto and if you don’t have that as a wellness wearable, you’re going to be behind.”

“Fitbit’s already doing pretty well so I don’t know if they have a huge room to grow. I can’t think of any real examples

of winners I can get behind. A lot of companies have potential, but it’s hard to say who is really going to take off.”

“Misfit has some buzz behind it. They seem to have a nice marriage in terms of their branding, between that fashion

side and the engineering and functionality side.”

“I’ve learned to not try to guess what Apple is going to do. Apple is in such a strong position. The iPhone is such an

incredible platform. It’s very, very challenging to work outside the bounds of what Apple is doing.”

“We’re doing a lot of Android work right now, and it just feels like nothing that we’re doing can be the real deal until

we’re ready to go on an iPhone. To me, their real strength is starting from that position of being a platform. Whether

or not they can create an actual device itself that becomes a superstar, I’ll believe it when I see it.”

“The supply side market is always going to be a commodity. I don’t see somebody exploding out just because of the

new technology that’s happening. The basic components we’re using are the same as always. It’s not going to be any

different than the patterns that have happened before that. What is more interesting is that space in between where

someone is creating a platform. The big thing that Apple decided is that its phones are going to support BLE

Widespread adoption will

probably take closer to 10

years than three. I think part of

the rationale is that a lot has to

go right for it to really be

valuable. I think there are

elements of what wearables

are able to provide people right

now or how it’s framed, where

there’s a little bit of a mismatch

in terms of what will really be

valuable.

Hardware Product Manager, Boston

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Wearable Technology

[Bluetooth low energy]. Now we’re starting to get into the space of iBeacons. Those are powered by the new version

of Bluetooth, which is very low-powered so it allows you to have devices that don’t need to be charged very often.”

“Another company called RadBeacon [Radius Networks Inc.] has kind of done that for Android. What’s interesting

about these companies is that they’re in a parallel space compared to wearables. I think wearables are going to

interact with Bluetooth energy stuff. As a parallel, those guys are going to start to form the platforms on which

entities can start building and adopting the technology. That’s where you can start seeing the supply-side benefit.”

“If someone really does create an easy developer interface or a device that

connects really easily to your phone and has some great integration, that

could be really interesting and have a lot of potential. There’s a whole scale

for how easily you could make developer tools available. That’s where you

can see someone who’s not a front-facing product begin to benefit.”

Miscellaneous

“In terms of getting to the point where people say that wearables has been

a success story, I do think it needs to go beyond fitness tracking and beyond

a mindset of having a wearables be a fundamental personal device and

something that is a digital mirror of your life in all aspects, not just in terms

of fitness. That may mean being able to track mood or provide insights on

aspects of your life that you didn’t even consider tracking initially. It’s not so

much a market segmentation at that point then. It ends up being more of a

broader mindset that cuts across segments.”

“The one thing I’ve heard from people about the Holy Grail is being able to

track food intake without having to manually input anything. A few people

have thought about doing that—everything from implants in your mouth or

the Google Glass diabetes contact lens is going to be applicable to food. The

Proteus [Digital Health] guys that let you ingest a pill. There are all sorts of

avenues, and I don’t think any of them are particularly close.”

“The democratization of tools and the fact that there is more accessibility to become a developer is something that’s

a much bigger change than just wearable. But it’s causing impact that affects the wearable industry as well.”

“Hardware as a place for people to innovate has been making a comeback in the last two or three years. That’s the

bigger picture trend with everything from Kickstarter being a platform to putting a product out to prototyping tools

like SparkFun [Electronics]. Hardware is sort of coming back in. Investors are taking more chance there.”

“Your pool of ideas and marketplace for wearables is widening. You’re going to have more people willing to take on

niche products and tackling that space. You’re going to see more consumer options. To me, that means everything is

going to be stratified and gathered out in terms of who owns market share.”

“These changes make it harder to figure out skill sets and roles and what makes a valuable team. So much of what

wearables have to offer have to do with the user experience rather than the technical breakthrough, though you

probably need both.”

2. Executive of Clothing+ Group, a Finland-based developer of textile-integrated biometric sensor products

Sales continue to rise 10% every six to 12 months, with higher increases seen for margins and profit. Sports and fitness

devices will lead the wearable market, but market adoption ultimately will stem from devices that solve a lifestyle, health

or fitness problem. Head-mounted displays like Google Glass will go mainstream in four to six years, while body monitors

will see slower growth and healthcare devices will hit their stride in six to 10 years. Sports wearables will take off in one

to two years. Adidas, Under Armour and Lululemon Athletica Inc. (LULU) are leading in the athletic clothing sector.

Wearable Tech Market Potential

“We are growing fast. We’re looking at a 10% increase in number of sold sensor products but a far higher increase in

margins and profitability.”

“Clothing+ is looking at a potentially huge growth, and even at our most conservative expectations the future looks

very bright for Clothing+. Our vision is to make sensors disappear in clothing. … Clothing+ makes about 75% of the

world’s textile heart rate sensor straps for almost every manufacturer of HR monitors. We are now shifting focus to

the sportswear industry and are in the process of introducing the existing, tested technology to sports bras and tops.

I actually ended up getting a

Pebble at a developer

hackathon event. After a week

of misplacing the charger—and

it’s such a customized charger

so it’s really difficult to get a

replacement—there was sort of

no driver for me as a user to

want to use it. I probably only

used it for a week or so. It was

very easy for me to walk away

from it.

Hardware Product Manager, Boston

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

Successful launches with Clothing+ heart rate sensors from PureLime [A/S], Shock Absorber, Kalenji and Berlei are

leading the way, and we’re launching with three more global brands in the very near future.”

“The [wearable industry growth] estimates are difficult to compare and judge because the reports don’t share a

common definition of what really is included in ‘wearables.’ Clothing+ understands a heart rate sensor strap is likely

not really classified as a ‘wearable’ although being body-worn is essential to its function. For this reason we have a

hard time following the reports and only read them to form a general idea. We expect the whole notion of ‘wearable

technology’ to become diluted into just being ‘normal’ or to become just another form factor for some devices. … We

believe it will take another four to six years before head-mounted displays such as Google Glass will be common, but

body monitoring will grow on people slower … closer to six to 10 years. On the other hand we have very good reason

to believe the sports wearables market will take off within a year or two.

Some 350 million sports bras are sold annually in the world, and with some

very prominent brands launching sensor-equipped bras, it isn’t

unreasonable to think the market is measured in the millions very soon.”

“Sports and fitness will be the breakthrough market for wearable

technology. There is an existing consumer segment familiar with and hungry

for new sensor data. They are willing to spend and the retail channels, and

logistics chain are already set up. The benefits of wearable tech don’t need

to be explained to the target group, and there is healthy segmentation

within the market providing the quintessential opportunity for differentiation

by design, price point, functions, etc.”

“The activity monitor solved only a part of the problem … but it didn’t really

coach the user into improving their habits around the activity of

moving/walking/running. And the data isn’t very reliable either in many

devices. If eating a slice of pizza scores higher than walking up a flight of

stairs, the unreliability becomes too frustrating to keep following. Another

aspect of the activity bracelets was that they were for a while a status

symbol. … We see the activity monitors are already kind of a thing of the

past.”

Wearable Tech Winners and Losers

“Products that go tech-first and seek to push any function into a body-worn

form will not be able to overcome the ubiquitous might of the mobile device.

Products that either 1) are based on a wearable form factor or 2) are

desirable enough for the consumers from points of view of design and

integration with existing device ecosystems [iOS, Android] have a far better

chance of surviving.”

“Adidas, Under Armour and Lululemon are far along the wearable tech path,

and their respective approaches make sense, pun intended. It’s going to be interesting to see what Nike [Inc./NKE]

and Apple can cook up too. The medical instrument giants are also in line to get their hands on the newly available

tech, but not from a trend point of view but more from the opportunity to make better, more efficient products.”

Miscellaneous

“Wearable tech is going to go down as a buzz word and catch phrase of the mid-2010s and will sound really funny

and movingly retro in 10 years. Companies with the word ‘wearable’ in their name will rebrand themselves at some

point. The killer product will solve an actual problem people have and not introduce another body-worn form factor,

but will integrate with an existing one, like clothing. A smartwatch that offers the same functions as a mobile device

will not survive as the wrist as a user interface is less ideal for operating the functions of a phone.”

3. Nicholas Langston, senior manager of business development for TE Connectivity Ltd.’s (TEL) Wearable Group

ARM Holdings could be one of the big winners within the supply chain as wearable devices gain popularity. Companies

that design and manufacturer fiber optic connectors, interconnectivity systems and antennas are well positioned to win.

In the connector/antenna category, the source identified his company as well as Amphenol Corp. (APH), Laird PLC

(LON:LRD) and Molex (owned by Koch Industries Inc.) as potential input/connector winners, although only TE Connectivity

Sports and fitness will be the

breakthrough market for

wearable technology. There is

an existing consumer segment

familiar with and hungry for

new sensor data. They are

willing to spend and the retail

channels, and logistics chain

are already set up. The benefits

of wearable tech don’t need to

be explained to the target

group, and there is healthy

segmentation within the

market providing the

quintessential opportunity for

differentiation by design, price

point, functions, etc.

Executive, Finland-based Textile-

integrated Biometric Sensor Developer

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Wearable Technology

has fully committed to wearable devices. In the near term, device makers like Fitbit, Jawbone and Misfit Wearables will

have an early lead or product edge, but no single company dominates the space. They may fall behind if they fail to move

beyond activity monitoring. State-of-the-art wearables have seen a tenfold increase year to year. Health and fitness

devices will continue to lead the consumer market while glasses will drive growth in enterprise applications.

Wearable Tech Market Potential

“We do not make wearable devices. We make the technology that enables

the devices. We design and manufacture components like Wi-Fi connectors,

things that transmit and move information, antennas and cables to charge

devices. We make products that are at the heart of electronic connections

for industries including automotive, energy, broadband, healthcare and

aerospace. Our company is making a conscious effort in wearable devices

and has formed a new Wearable Group based in Menlo Park. I was

recruited to head up the group.”

“Wearable device sales are increasing very quickly year over year. For

example, we looked at the industry [internal report] and in the first quarter

of 2013, 200,000 wearable units were shipped. For the same period in

2014, 2.5 million wearable units were shipped. It’s grown tenfold. We tried

to exclude the older wearable devices, including things like hearing aids,

pedometers and GPS devices. We even excluded the smartwatch and

activity monitors. We just looked at the new class of devices that have

three-axis accelerometers, temperature sensors and Bluetooth. We are

forecasting a 25% compound annual growth rate for wearables.”

“My assessment of market size depends on the time of day you ask me. Smartphones went over $1 billion in the first

year or two. If you consider that textiles and apparel will be a genuine part of the wearable technology, the market

potential will be much bigger. Right now I’m inclined to say it’ll be a $3 billion to $4 billion unit market by 2018. If

you factor in smart textiles, the market would be much bigger. Some people are talking about 100 million to 200

million units by 2018. We are making plans and bringing on textile engineers to [leverage] that growth. The key driver

of growth may be Apple. They will be getting into a discussion of wearable devices and the Apple Watch at their

annual show next week. That will not only drive interest but also a lot of copycats.”

“The hottest selling devices are Fitbit and Jawbone, and both are driving

volume. We expect Christmas sales to be high. Right now we’re in Wearable

2.0, and we will see Wearable 3.0 at Christmas. The next step will be

achieving the aesthetic that people want. You are starting to see fashion

accessories that can be worn on the wrist or in a cuff, as a piece of jewelry

or a ring. These are Bluetooth devices, really. Input is a growth area and one

of the big segments will be gesture recognition and how we interface with

the devices.”

“Health and fitness have been leading the market today. If you look at

market value it is being moved by enterprise. As the devices become better

and less intrusive, things will move back to the consumer side.”

“If the product does not deliver powerful data and sensing and deliver

insight about your health or the environment around you, it will not last. A

lot of people are trying to figure out how to do this by making simple and

elegant devices but with limited function.”

Wearable Tech Winners and Losers

“Misfit Wearables has designed a beautiful product that is simple and

basic. It’s one of the first fashionable wearables.”

“Fitbit and Jawbone have early momentum that may carry them at least for the next season. In the long run, it’s

anyone’s guess which company will win the segment. If someone gets the watch right or gets the glasses right or

gets the garment right, they could win. Anyone making activity monitors will lose if they don’t get beyond that.”

“There are a couple of ways to look at the supply side. One big winner could be someone like ARM, whose technology

has dominated mobile for years. Anyone making fiber-optic connectors and interconnector systems will win. Anyone

making antennas will win because every single one of these devices has an antenna. Obviously, TE Connectivity

Wearable device sales are

increasing very quickly year

over year. For example, we

looked at the industry [internal

report] and in the first quarter

of 2013, 200,000 wearable

units were shipped. For the

same period in 2014, 2.5

million wearable units were

shipped. It’s grown tenfold.

Sr. Manager of Business Development

TE Connectivity Wearable Group

One big winner could be

someone like ARM, whose

technology has dominated

mobile for years. Anyone

making fiber-optic connectors

and interconnector systems will

win. Anyone making antennas

will win because every single

one of these devices has an

antenna.

Sr. Manager of Business Development

TE Connectivity Wearable Group

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

manufactures antennas and connector/interconnectors. Other companies in this segment include Amphenol, Molex

and Laird. None of them are focused on wearable devices, while we are making a very conscious effort in the area.”

Miscellaneous

“One important trend in the industry has been a shift away from electronic devices. The devices are disappearing or

being put into a garment. There will always be devices like smartwatches although no one yet dominates the

category. Glasses are an important product in enterprise.”

“Instead of having one device, we expect there would be multifunction built into the garment and then data

transmitted to an iPhone. The information will travel from the shirt to the phone and from the phone to the cloud or

network system.”

4. John Blet, senior marketing associate for Misfit Wearables

Apple and Google are expected wearable tech winners in the category of large companies. Among startups, well-

positioned leaders are Misfit Wearables, Fitbit, Jawbone and Withings, at least in the area of activity tracking devices.

Widespread adoption in leading wearable categories like health and fitness could be realized in three to five years. The

overall market prospects should hover between $25 billion and $35 billion once widespread adoption takes hold.

Concerns over fashion, product design, wearability and battery power present challenges.

Wearable Tech Market Potential

“I do not see the market reaching $50 billion in four years. I think the market will be more in the range of $25 billion

to $35 billion by 2018. As technology improves and more people find out about activity trackers, I think they will go

mainstream. Where we will be in four years I don’t know, but I certainly think Misfit will still be around.”

“As for widespread adoption, I want to say we will see it in three to five

years. But again, I hate to make projections when we don’t know what Apple

is doing. Someone like Apple can change everything when it enters the

market. I don’t know what effect it will specifically have on activity trackers.

If Apple comes out with a watch that has an activity tracker and a camera,

some of the tracking companies may have to change their market strategy.”

“There will always be a market for activity trackers because of the price

point and affordability. Something like an Apple Watch could cost a couple

of hundred dollars or more, and who knows whether you additionally would

have to sign a two-year contract with the telco for connectivity? It might be

as much as a $600 device. That would be too expensive for most people in

the market for an activity tracker.”

“The hottest item on the market right now has not been launched yet, and

that would be the Apple Watch. No one knows exactly when it will be

released, but everyone in the wearable sector is waiting to see. The activity

trackers that are hot and popular include Jawbone, Fitbit, Withings and

Misfit. There are some other key players, but these four are on top. I would

be hesitant to pick a leader or category winner with Apple about to make a

release.”

“Our sales have increased rapidly, but I don’t have precise numbers in front

of me. Our device is sold in over 30 countries, including the U.S., in Europe and China, all fast-growing markets. As

the holidays come up we are expecting huge growth for the Shine and activity trackers. Shine sells for $99.99 at

retail, which is competitive with others. We are sold in Target, Best Buy, Wal-Mart and HHGregg, so we are readily

available and affordable.”

“Based on my professional experience in the product testing industry and based on my personal experience, having

to worry about charging the device is a big annoyance. … With our product, battery power is built in, and the device is

even waterproof so you never have to take it off, not even when you shower.”

“Wearability is an important issue. People who depend on trackers for health monitoring have a strong interest in

wearability. Design may be somewhat less important for those into fitness. But some users are very fashion-

conscious. If you buy a device that can only be worn on the wrist, you may be less inclined to wear it all the time. It

might be too sporty if you go to an elegant event.”

The hottest item on the market

right now has not been

launched yet, and that would

be the Apple Watch. No one

knows exactly when it will be

released, but everyone in the

wearable sector is waiting to

see. The activity trackers that

are hot and popular include

Jawbone, Fitbit, Withings and

Misfit.

Senior Marketing Associate

Misfit Wearables

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

Wearable Tech Winners and Losers

“I don’t like speaking ill of competitors, so I’d rather not talk about losers. It’s hard to pinpoint winners in certain

categories, but in our category it would be the four companies mentioned before: Misfit, Fitbit, Jawbone and

Withings. A lot of people are waiting to see what the bigger companies do, especially now that Google, Samsung and

Apple are coming out with devices. I would not be surprised if Apple and Google benefit from growth in wearable

technology. It also may depend on the device, what it does and price point.”

“I think we will see fast growth for sensors in clothing. Medical will be a leader in wearables for all different reasons.

Patients with heart problems would wear a tracker to monitor blood pressure or oxygen levels, and then have the

information automatically sent to a hospital or doctor. As more people find out about wearable devices, we will see

more products that are combinations of the technology side and the medical side.”

Miscellaneous

“Privacy is a huge issue, and that’s true for a lot of companies working in Wearables. We try to be extremely strict

about privacy to make sure we are not sharing data unless the customer or user allows it. In part, this is done when

you first get our device. You can ensure that no information is shared unless you give permission.”

5. Pierre-Alexandre Fournier, CEO and co-founder of Hexoskin, a spinoff of Carré Technologies Inc.

Apple, Google and Samsung are poised to be wearable winners on the consumer side, along with companies that

manufacture CPU/GPU chips and wireless components. Suppliers well positioned to benefit from growth in wearable

devices include Qualcomm, Intel, Advanced Micro Devices Inc. (AMD) and Texas Instruments. Wearable devices that

monitor fitness, health and activity will lead the consumer market while smartglasses will drive enterprise adoption. The

buzz around wearable devices is not overblown, and segments of the market like activity/fitness monitors could easily

top $1 billion during the next year. Hexoskin’s smart biosensor shirt has seen growth double year to year, thanks to

healthcare and fitness applications.

Wearable Tech Market Potential

“Hexoskin makes biometric sensors for the healthcare and sports industry, and we are extremely active in

collaborations with NASA, the U.S. Navy and MIT, to name a few. But most of our sales are to people who are serious

about physical training, with or without a trainer. Hexoskin helps you decide how best to optimize your training

experience by finding the right metrics to enhance and improve your activity.”

“Our sales have definitely increased since we launched our product last year. We are part of a new category of

wearables, so if you go to a retail store, you will not find our category in any of the aisles. We are selling exclusively

online. I can’t tell you what the exact numbers are, but our sales have more than doubled in the last year.”

“If you want to order a biometric shirt, we are the only company to go to at this point. Our company sales were

traditionally on the ambulatory medical side or on the enterprise side, through our supply of heart monitors and the

GPS products. We also have an EKG in one of our shirts to monitor activity and movement.”

“The wearable category is very large and diverse. There are watches and activity bands, and there are products with

no user interfaces. We think there will be a doubling in sales every six months over the next year. We certainly see a

market for biometric products and believe that over the next five to 10 years they will grow into a billion-dollar

market. We see opportunities for sports training as well as opportunities for remote health monitoring, remote sleep

monitoring and remote cardiac monitoring. The overall goal is to make healthcare more affordable and accessible.”

“Adoption of wearable devices will be a little bit slower than smartphone adoption. Enterprise is a leading market via

smartglasses with screens and connectivity. If you think of every worker that uses a computer but needs to be

hands-free, the potential for wide adoption is huge in enterprise.”

“We see more and more fitness uses, and we are just beginning to see more people use mobile apps because they

lower healthcare payments. There are more devices integrating providing health information to the wearer as to

doctors and health insurers.”

“The market research on activity trackers and step counters alone projects a $1 billion market for that category. The

more active you are and the more you want to fitness-train, the more likely you are to use a device. Among marathon

runners, we see a 10% increase in device use.”

“The market is changing with regard to demographics as baby boomers enter retirement. The boomer segment is

both health-conscious and connected and that group will certainly drive growth.”

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“Activity trackers are meant to provide better information and a better experience. It’s like a video game: If you use a

stepper for six months and learn about your movement and how to improve your experience, then once you learn you

can act on it, change your lifestyle and recognize needed pattern changes to improve. After about six months the

device tells you what you have to do, and if you’re only paying $99 for the device it’s well worth the money. Some

people are talking about it as if tossing the device after six months suggests wearable are a fad or that the consumer

saw no value in using the device and so tossed it. … The step counters are not like the devices that measure blood

pressure, which may require long-term use. That may mean healthcare is positioned to have more potential or be a

more powerful market than activity fitness devices.”

Wearable Tech Winners and Losers

“It’s hard to tell at this point which companies will win or lose. It still feels like the PC market felt at the end of the

1970s. At that time, no one could really tell who the winners and losers were. There were still new players about to

enter the market, and some others were acquired.”

“Apple and Samsung have a shot at being winners in the market. There are some startups that have potential to gain

footing. And there are some players that don’t even exist yet. We will see different winners and losers in different

categories of the wearable market. There could be a winner in the software segment or by a particular fashion

company or healthcare company. One thing I’m sure of: Something is happening, and things will continue to grow.

The market potential is not hype or overblown.”

“At the supply level, the companies that power electronics, manufacturers

of CPUs and GPUs, and wireless components stand to benefit from growth

in the wearable market. But I still think most of the margins will be seen on

the software side.”

“Suppliers such as Qualcomm, Samsung, Intel, AMD and Texas Instruments

could be winners. Wireless companies and the kind of suppliers who drive

the subset of the Internet of Things could win. On the hardware side

Microsoft [Corp./MSFT] is well positioned in healthcare. Apple, Samsung

and Google have made advances on the consumer side.”

Miscellaneous

“You should keep an eye on the aggregators, systems integrators and

service providers. Service providers are not as sexy as companies developing the next great device, but they are

equally important.”

“We are seeing a lot of different business models in the wearable area, and I think we will continue to see a lot of

innovation in business models and data use.”

“There are companies working with Hexoskin and others on API [application program interface]. There are hundreds

of software developers working with biometric clothing companies for applications in medical monitoring and

entertainment. If you play a sport you might rely on a biometric, but this appears or becomes part of a video game.

There’re several large companies building software for this type of technology, but I’d rather not give names of those

working with us. Companies are not just in the U.S. but also in Japan, Singapore, Russia and Europe.”

“Very few companies focus on health clothing and biometric monitors, so some of the people looking for solutions

are talking to us at this point.”

“We don’t see a problem with keeping control of confidential or personal information. So far the biggest problem with

remote care devices is that the devices are not easy to use or are not working properly.”

“We are looking for solutions that help blend communication between devices. There is a big issue with integration

between different devices, and we see that as a bigger problem than privacy.”

6. Former senior technology designer and product developer at a semiconductor company

ARM is a strong leader because of its processors. Companies like Atmel, Texas Instruments, and Freescale also have the

potential of gaining share because of their expertise in microcontrollers, as battery life and power remain major hurdles

in wearables. Intel, Microsoft and Apple might not succeed in the wearables space because of their incumbency in PCs,

mobile phones and tablets. The wearables market is ripe for new entrants with two strong directions leading the way:

industrials and fashion.

Wearable Tech Market Potential

One thing I’m sure of:

Something is happening, and

things will continue to grow.

The market potential is not

hype or overblown.

CEO & Co-founder, Hexoskin

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“There are two market segments we’ll see the most activity in. There’s going to be some interesting work done in the

industrial automation part, where you have a headset or a Google Glass that provides information to someone that’s

picking stocks, for example. We’re also going to see chaotic but interesting applications in consumer devices that are

fashionable but have some function beyond fashion, like a bracelets or eyewear.”

“The industrial part is starting to happen right now. Things are trickling out. Those sales are growing already, and

they will continue to grow. In the consumer space, we’re still going to experiment.”

“The forecast of a $50 billion market by 2018 is a bit high. I’m not taking that to the bank. But it would be great.”

“Symbol Technologies [which makes portable bar code scanners and is a subsidiary of Motorola Solutions Inc./MSI]

is one of the leaders.”

Wearable Tech Winners and Losers

“ARM is very strong from a component perspective, but ARM is somewhat vulnerable [because competition has

grown]. Almost anyone can design a piece of silicon or hardware for a wearable-type device. Companies aren’t

limited anymore to going to ARM or Intel or Qualcomm or TI or Atmel for processors. They can do their own design if

they want; they can fab, and they can do offshore manufacturing or onshore. The volume isn’t there yet for that.”

“We’re not through with the experimentation phase, which is expensive because things are unique and low-volume.”

“There’s buzz in the Valley about a renaissance of hardware capability in the high-tech sector. It’s relatively cheap,

and the hurdle for getting a design done and manufactured isn’t that great. You don’t have to be a $500 million

company to do that.”

“An interesting company in the Valley is Atmel, which is in the

microcontroller space. One of the things constraining wearables right now is

battery life. We don’t have enough power to drive the applications and

sensors. Google Glass is an example: If you start using the camera and the

screen, you kill the battery life.”

“Atmel, TI and Freescale are interesting in this space because they have 8-,

16- and 32-bit microcontrollers versus the ARM A or R series processor,

which is going to take too much power. The ARM M series, the lowest power

processors, is still going to be too power-hungry to be always on.”

“Intel has the people and the technology to be a huge success in this

market. I would also lump Microsoft and maybe Apple into this. But these

companies are the large incumbents in the PC and mobile phone spaces.

They’re going to have a difficult time because of their success with the cell

phone and tablet form factor. They’re looking at the cell phone for being the

anchor point for wearable computing. But I think the compelling killer app is

not going to be anchored with the cell phone.”

“Apple is a special case because we love the iPhone and the iPad, but the

incumbency effect of being successful with a certain form factor or market will make them try to create their next

success on top of that.”

“Wearables are going to be so different. I expect somebody new or somebody unexpected in there. There’s no barrier

to new entrants, and there are a lot of people hindered by their previous success. It’s a market that’s ripe for

somebody new to come in.”

“Companies—not Intel, Microsoft or Apple—that are traditionally in the wearable space in terms of fashion are

starting to experiment. The first wave of that is in the fitness area, but that’s just one part of it.”

Miscellaneous

“All the technology pieces are there to evolve into great things. There’s a lot of energy here. We have all the key

ingredients for the hardware and a lot of the pieces for the software. The problem is we have a lot of it, but there’s no

clear and easy-to-use platform for hardware/software because there’s no killer app to tie everything together.”

“The killer app could be a bracelet that’s a lifestyle aid or monitor, with a calendar and phone or a wearable

computer that’s integrated stylishly in your eyeglasses so you can receive data there or take notes or a picture. Or it

could be some kind of other wearable or implantable device.”

“Some people are pursuing direct control of devices through thought patterns and brain waves. There’s interesting

work in its infancy that people are looking at. It’s almost in the realm of science fiction.”

Wearables are going to be so

different. I expect somebody

new or somebody unexpected

in there. There’s no barrier to

new entrants, and there are a

lot of people hindered by their

previous success. It’s a market

that’s ripe for somebody new to

come in.

Former Sr. Technology Designer &

Product Developer

Semiconductor Company

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

12

Wearable Technology

7. User experience executive in the mobile industry

Apple and Samsung are among the winners in wearable technology because they are the two biggest competitors making

mobile cell phones, which can be called wearable devices. Jawbone and Misfit also are prominent, as is Google with its

Glass. Amazon.com Inc. (AMZN) is trying to enter the field with its newly released Fire phone. Samsung may not be able to

continue leading in the space because it lacks innovation. Meanwhile, smaller companies like Jawbone will have a hard

time competing and probably will be acquired. In terms of components, ARM is the winner because of its technology

behind processors. Qualcomm is the chip maker that leads in wearable devices. Intel also is strong, but it has been more

focused on the PC space. NXP and Broadcom are leaders in NFC technology. The devices that will succeed are those that

make life better for the consumer, provide a good user experience, are reliable, and can become fashion statements.

2015 and 2016 bear watching as second-generation devices will be released in late 2014 and third-generation devices

are expected in 2016.

Wearable Tech Market Potential

“The No. 1 wearable device is in your hand right now. It’s a mobile cellular phone. We carry it every day; we wear it.

It’s a big winner and will continue to be. And the two biggest companies in the category are Apple and Samsung.”

“I think 2015 and 2016 will be big years for wearables. Companies are already bringing them to market. The first

generation was over 2013, 2014. The next generation will be late 2014 through 2015. And the third generations will

be 2016.”

“Besides phones, wearables for now are focused on glasses and watches.

Google Glasses have moved into styling even. They’ve upgraded all the

hardware and software. They are also developing applications out to three

generations. I think they will be releasing it to the mass market in early

2015; that will be a big push for wearables.”

“Watches will have to became a fashion statement as well as a function

statement.”

“Fitness apps that are very focused on a specific sport such as running or

biking are multiplying. There’s even talk that the space is getting crowded,

and the margins are going to compress.”

“It’s probably a good estimate that the wearables market will be somewhere

between $3 billion and $50 billion [by 2018]. If you say everyone with a cell

phone will buy one wearable somewhere on the planet, that could be a good

forecast.”

Wearable Tech Winners and Losers

“Apple is working on a holistic program they’ll release with software that will

talk with every device out there, like Jawbone, Fitbit and Nike. Apple will also bring their own products out. I think

they will definitely continue to be a leader in that space.”

“Amazon will try to catch up. They just released their first phone. When someone enters the market in a space

they’re trying to catch up in, it’s a bigger effort. For their next release, they will have learned a lot and it will help them

get to where they want to be. They have the financial capability, the know-how and the desire to grow in the space.”

“Another company in that space that has backing and the ambition to make people’s lives healthier is Google. They

will roll around with Android and separate initiatives that will focus on health and healthcare. They have many core

innovative ideas, and some will be developed further. Whatever they do is always interesting.”

“We’ll see what happens with Motorola [Moto] 360 when it comes out. It will have communication functions that will

move off the phone and onto the wrist that allow you to respond faster. It will create a more capable conversation or

exchange by having the device on the wrist versus pulling out the device all the time. It makes the Android device

more wearable. It will be interesting to see how the market responds to that. It is expected to be released in the fall.”

“The challenge for wearables is to make life better. That can leapfrog into the healthcare industry and provide an

advantage. One of the companies in the medical device space is Misfit.”

“Other companies that stand to gain are NXP … and Broadcom. Those are the two leaders in near-field

communications technology. They compete strongly in that space.”

“Qualcomm and Intel have the power chips for the processing units. And ARM works with everybody to bring that

together. They own a lot of intellectual property. They touch everybody’s space with their technology. I believe

I think 2015 and 2016 will be

big years for wearables.

Companies are already bringing

them to market. The first

generation was over 2013,

2014. The next generation will

be late 2014 through 2015.

And the third generations will

be 2016.

User Experience Executive

Mobile Industry

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

13

Wearable Technology

Qualcomm is a big winner. Intel is trying to emulate Qualcomm and move more broadly into the mobility space after

owning the PC space. But Qualcomm has a lot of, if not the most, silicon in products in the space.”

“Players like Jawbone will probably be acquired at some point or could fall behind because they’re not big enough to

be a separate racehorse. Smaller startup companies that have grown on their own technology and capabilities will

have a harder time.”

“Companies that focus in on the consumer and great product reliability, where people are actively interested in the

product, will be the winners.”

“The fads, the flash in the pan, those are the things people put aside after six months.”

“I don’t know how long Samsung will be able to grow and innovate instead of copying and catching up. Samsung may

end up being one of the companies that will not be a winner. The smaller companies that are hungrier, like LG

[Electronics Inc./KRX:066570] and HTC [Corp./TPE:2498], have better and more interesting products in terms of

how they can be used.”

“You can Bluetooth and Wi-Fi devices into your phone to get more computing power out of them. Standalone devices

are still weak and don’t feedback well to a network tower [cloud computing] so that it can collect the information and

do what needs to be done with it.”

Miscellaneous

“There’s so much going now in the technology space, particularly in wearables, but it’s still not clear who’s going to

be doing what.”

8. Mobile industry veteran for a major international electronics company

Apple is likely to be one of the primary winners in the wearables space. It has succeeded in making its previous products

fashionable. Health and wellness are leading the market, as confirmed by Apple’s announcement of its HealthKit.

Samsung has a good chance of being the other leader. For components, the winners will be the same as in the mobile

phone industry. Fitbit may be a loser, especially after Apple enters the smartwatch market with a high-end product, and

as it gets squeezed into the middle by low-end devices from China. Microsoft and Google do not have a history of

hardware successes and could lose out in launching a wearable device.

Wearable Tech Market Potential

“The wearables space is being led by health and wellness. Apple’s announcement of HealthKit reinforces that. We’ll

find out if Apple’s focus is truly health, but they’ve hired a lot of industry health experts.”

“In usability studies, people are surprised how convenient wearables are.

Not having to pull the phone out of your pocket is something that’s a high

user satisfaction feature for smartwatches. The challenge will be for people

who haven’t experienced it yet to buy. Right now the average consumer is

not likely to buy. Fashion has a lot to do with it. In the phone industry Nokia,

Motorola and the iPhone were fashionable. The watches that are out in the

market are not yet deemed fashionable.”

“The market potential will be either very big or very tiny. The question is will

this be like TiVo or the iPhone?”

Wearable Tech Winners and Losers

“Fitbit, the current market leader, is going to be squeezed because low-end

devices coming from China are very cheap, and high-end devices, like from Apple, who have retained people from

the fashion and jewelry business, are coming in. History shows there’s not much in the middle, and that’s where

Fitbit is going to end up. Realistically, Fitbit is better poised to compete with Xiaomi than Apple.”

“In the smartwatch category, Google is pushing the prices really low. The industry will shake up once Apple

launches.”

“Among the less than obvious winners will be application and enterprise companies that manage workplace

wellness. Enterprise wellness program management companies like Keas or Jiff will have more to work with, with

constant monitoring and the popularity of these devices.”

“In terms of components, the same companies will be the winners as for phones. It will be the same companies

making the screens and the batteries. There are, in addition, some smaller integrative sensor fusion companies. …

These companies are the usual ones like Samsung, Maxim Integrated [Products Inc./MXIM], Qualcomm.”

It’s going to be a race between

Apple, or whoever will be the

market leader, and whoever

becomes the early No. 2.

Mobile Industry Veteran, Major

International Electronics Company

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“The people winning in the semiconductor space for phones will be the same ones winning for wearables. The gap

between wearable computing and phones, in terms of component vendors, is not as great as it was between the PC

and phones.”

“Doing wearable computing is very similar to doing any kind of computing. Companies with a low volume of sales,

when there will be a gold rush for wearables, will not be successful. Component providers will be servicing

companies with large volume sales. Others like HTC will have problems securing components from their

manufacturing partners. Volume leaders will be serviced.”

“Samsung, despite its reputation of just being only a fast follower, has a track record of success. They are a volume

leader and will continue leading because they can secure components because of their volumes. They are the leader

in the smartwatch category.”

“Assuming Apple makes the market, there will be a need for another product on the shelf and other shelves in

competing stores. And that will come down to whoever can manufacture the most. Samsung has a good track record

of securing the supply chain.”

“The question is whether Google or Microsoft will come in directly with a product and whether those products will

resonate. Google hasn’t had a lot of commercial success with a retail product aside from Chromecast, which isn’t a

high-margin product. And Microsoft right now seems a bit toxic; when you put Microsoft on any product, it seems to

sell 20% less. You can’t discount merchandising in the success of a product. And shelf space does matter.”

“It’s going to be a race between Apple, or whoever will be the market leader, and whoever becomes the early No. 2.”

Miscellaneous

“People in the health industry are very excited because there’s a concept of natural experiments, trying to find

patterns based on data from consistent measurements. Now, measurements are for sick people, and we don’t have

that many continuous measurements from large populations who are healthy.”

“An interesting thing will be authentication and biometric information. Once you have biometric information, you can

use that to fingerprint users and better authenticate people. There’s potential for better security and usability,

whether in payment or enterprise authentication.”

9. Marketing and business executive at an international semiconductor company

The winners in wearable technology will be companies working on the back end of the industry, collecting, aggregating

and selling useful data back to consumers. It is too early to identify these companies, but cloud players that can provide

a software interface will stand to gain. For now, big privacy and security issues must be resolved. The hardware that

makes up wearables is trivial; no money will be made in that in the long term. An area of some value is the

semiconductor space. Health/fitness and aging are the two major markets that

will lead in the growth of wearable devices because they can be monetized.

Sales of devices like Fitbit are growing, but many tend not to be “sticky.” The

industry is still in the early stages and will evolve during the next five years.

Wearable Tech Market Potential

“The real money on the wearables side is taking the information gathered

from the devices and marketing it back to a group of like-minded people

and providing them value back. For anybody big like the healthcare

providers or IBM, they want to collect, aggregate and sell the data back.”

“If the money is to be made on the back end, in the data, there are several

markets that will be monetized. You’ll get health and fitness for one, and

there will be a slew of people to make money there. There will be the whole

aging segment too, monitoring your parents and general feedback. In health

and fitness, it will be about knowing your heart rate and aggregating that

data. Those two segments will be monetized.”

“Wearables will happen when you can monetize the software backend. They will be hype until then. Of course, if

Apple makes a watch, people will buy it, and Apple will make money. But that’s more fashion.”

“Google has everything to be successful in that space [of data collection], but people are overly sensitive to their

presence. I was shocked at the backlash when they acquired the Nest thermostat, so I wouldn’t put them first.”

Wearables will happen when

you can monetize the software

backend. They will be hype until

then. Of course, if Apple makes

a watch, people will buy it, and

Apple will make money. But

that’s more fashion.

Marketing & Business Executive

International Semiconductor Company

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

15

Wearable Technology

“Google has a really nice watch coming out that provides meaningful feedback. They can aggregate that. They’re not

selling watches. It’s just a data collection device.”

“The whole thing is further out than people think—not this year, maybe in five years. Wearables and cloud—it’s about

monitoring your house, a bridge, an infrastructure.”

“Activity trackers like Fitbit are a good spot for consumer wearables, and they’re seeing growth. They’ll continue on.

But these fitness trackers are not very sticky. People buy them and wear them a little while and then discard them

because they don’t like the way they charge or because they don’t provide anything valuable. They still sell because

they’re at the right cost point, have a reasonable battery life, and are an extension of the phone. I think they’ll

continue to sell over this season … but I don’t think there’s a future there because they don’t provide enough value.”

“The hardware today is pretty trivial. All these devices can be made in China for $20, and there’s no money to be

made there in the long term. The battery life is getting better, and they can track a few simplistic things.”

“The Nike device is a motion tracker, but it didn’t do very much. However, I see value in the ecosystem, and they did

do that right—creating a sense of community or an ecosystem of like-minded people, people with the same interest.”

“Google Glass is just a repackaging of the smartphone. I’m not a big fan. Inside, it’s the same parts as a cell phone,

maybe just without a big battery. They get a lot of press, but I don’t see any volume in that segment. Google Glass

doesn’t really solve any need. The original reason for it was enterprise, for example, if you’re climbing a telephone

pole and you don’t have the manual or you crawl into the fuel tank of an aircraft to clean it.”

Wearable Tech Winners and Losers

“At the bottom [of the value chain] you have the hardware equipment guys, who have to use a BLE [Bluetooth low

energy] radio, which has a microcontroller. This more than likely uses ARM, which more than likely has to talk to one

of the big cloud providers through software. Then these big cloud providers are the ones who will be targeting health,

fitness, aging, whatever. That’s the value chain.”

“The differentiation by the cloud companies will be in being able to provide a software interface that will talk to a

really low-end microcontroller.”

“TI also has their own microprocessor architecture and is a major player. But even architectures that use a non-ARM

processor might use one in the radio. ARM’s processor in the space is very rudimentary and very small, and it’s

easier to buy it from them and pay them a fraction of a penny per unit than build your own. ARM makes money in the

space, but I don’t think they have influence.”

“Intel is staffing a big team and spending a lot of money. It is pulling in people from other companies for their project

on wearables.”

“One of the visions on the path to wearables is for the device to hear and recognize what you’re saying. There are

huge privacy concerns there. If [the device] listens to you all the time, it can listen to things you might not want to

share.”

Miscellaneous

“If I were a venture capitalist, I’d put money in the sensor guys. Anybody with sensors will be acquired. … Intel bought

Basis, probably just for the sensor. There’s no value in the hardware outside of the sensor. All the silicon companies

are building sensors, seeing value there. And startups are innovating.”

“All you can measure on a wearable, an expensive one, is your heart rate and your activity. Sensors will evolve over

time. Silicon Lab[oratories/SLAB] has a sensor that measures UV to tell you if you’ve been in the sun too long.”

10. Semiconductor professional focusing on wearables

Apple and Samsung are expected to remain major forces in wearables because of their proven track records. Broadcom

is a major player in the wearables space’s semiconductor sector. InvenSense is strong in sensor fusion, but Bosch and

Kionix also do well with sensors. NXP and Atmel have a big thrust in the area of sensor hubs. ARM and Intel are very

present in the wearables space. Companies like Fitbit and Jawbone must find a way to scale their product to augment

people’s lives. The Chinese vendor Xiaomi has come out with a $13 smartwatch. Wearables 2.0 already are expected in a

year. Some of the projected growth figures could be exceeded as they were with smartphones.

Wearable Tech Market Potential

“[Wearables are] coming to the mainstream, and people are starting to notice it and are jumping on the bandwagon.

There are wearable technology sections in Staples and Target stores. I’m sure there’s quite a bit of revenue out

there, but to get full adoption we have to get beyond the hype where people will not look at it as a fad.”

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

16

Wearable Technology

“In another year when we get to wearables 2.0 or close to that, I think you’ll see much more revenue.”

“Wearables will still exist over the next several years, but it will appear in some different shape or form. There are

predictions by Juniper Research and others that by 2018 there will be 130 million devices shipped and billions of

dollars. I think it’s realistic to expect that some of those numbers will become real, and they might even be higher.”

Wearable Tech Winners and Losers

“The jury is still out on who in the wearables ecosystem will be the winners.

Of course, there are the 60,000-pound gorillas like Apple and Samsung. The

much-anticipated Apple Watch has not even been released yet. Samsung

has had several rounds, coming out with different wristwatches, but those

are experimentations. In terms of the Fitbit and the Nike FuelBand, they

have a lot of hype and a lot of press.”

“The question on Fitbit is how are they going to scale their business model.

It tells your weight, your calories, your steps—basic things. They now have a

Wi-Fi driven scale, not a wearable, but a complement to their product. The

Misfit Shine, a very nice design, provides health monitoring during the day

and sleep patterns at night. But really, what do you do with these things? … It’s yet another device I have to carry. …

It’s not really augmenting people’s lives yet. And that’s the goal of wearables 2.0.”

“From a semiconductor standpoint, Broadcom is very strong in this area, and they have an initiative to go after

wearables. They’re also very strong on the Internet of Things. Their mobile division has experience in the area.

They’ve done the baseband processors that apply to this kind of technology, and they have the experience.”

“From the IP standpoint, Imagination Technologies [Group PLC/LON:IMG]. They acquired MIPS, a processor

company, several years ago. They also do GPUs, and they’re highly focused on IoT and wearables as well. They

categorize different device classes like fitness health bands, watches and glasses, like the Google Glass. They’re

working on tailoring the applications in this space. I believe they’ve worked closely with Google [Android] Wear.”

“Also in the ecosystem is InvenSense, with sensor fusion—different kinds of sensors all fused together—working

together to collect this massive data, which needs to go to the cloud, and then data analytics to tell us the useful

information, what we can actually do, from the data it’s collecting from our sleep patterns, our daily running patterns,

eating patterns. InvenSense is definitely a strong company.”

“Bosch and Kionix are two other companies working on sensors as well, but

InvenSense is definitely leading the way. They seem to have the right all-in-

one and compete solution from a sensor standpoint.”

“Sensor hubs where you can sense data and do some local processing and

send it to a main processor for analytics will probably be in the devices

themselves. Some of the companies doing sensor hubs are NXP and Atmel.”

“Movidius [Ltd.] does image processing and will be tailoring its vision

processing to the wearables space.”

“Fortemedia [Inc.] does voice in wearables, enabling voice recognition and

clarity in smartwatches, for example. They also have to be low-powered in

order to have long battery life.”

“There are many software-related applications as well. I believe the

smartphone will not go away and will still be the hub to be paired with a

range of wearable technology. In some cases, it’s a combination. The apps

are the portal to the cloud and interact with the wearable device, and are

the human interface to the user.”

“Apple will [be] a force for wearables going forward. There are still a lot of

unknowns since they’re very secretive, but if they keep the pace of

innovation … they will remain a force, even if the iPhone ecosystem is very

much controlled by them as opposed to the open Google Android. That has

its pluses and minuses. Having a closed system is good if you’re ahead in the game and you know what disruptive

technology is coming. If you miss that window, which I hope Apple will not, they may be shoved aside in favor of

Samsung.”

“Samsung has open source and seems to have deep pockets. They seem to throw everything at the wall; if it sticks,

then it’s OK. That’s how they came up with Galaxy S4 and the tablets that have been very successful. But they tried

In another year when we get to

wearables 2.0 or close to that, I

think you’ll see much more

revenue.

Semiconductor Professional,

Focusing on Wearables

A lot of the innovation for

wearables is going to have to

come from the smaller guys,

and a lot of these will be

acquired by the bigger

companies. There are going to

be IoT companies that want to

have a wearable component to

them. They may want to have

data analytics as well. … The

next couple of years will see

how it pans out.

Semiconductor Professional,

Focusing on Wearables

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

17

Wearable Technology

many devices before they got to that place. Apple is very careful and calculated in offering just one or two devices

and making sure they do it right the first time.”

“I don’t see anybody else as major players. There are other companies in the Google/Android ecosystem like HTC

and the iPhone imitation Xiaomi from China, which is actually doing quite well. They came out with a wearable

smartwatch that’s only $13. That will give Samsung and Apple Watch a run for their money.”

“ARM and Intel are strong in the space. Intel has a whole Internet of Things city in Dublin, and they have a

competition on wearables. Intel will continue being a major force. But ARM has been gaining a lot of ground because

of the low-power nature of their processors. It remains to be seen as ARM and Intel duke it out to see who’s going to

be stronger in wearables. Intel has a strong microprocessor base, but they need to get to that low-power requirement

they need for both portable computing devices as well as wearables. I think ARM is very close to being there already,

and they also do infrastructure as well—microservers that are gaining wide appeal.”

“The biggest challenge is going to be for companies like Fitbit and Jawbone. They’re good companies. Jawbone has

been around and has done Bluetooth headsets and other successful devices. If they can scale their product and

meet the requirements for wearables, then they will be fine. I feel that Fitbit is going through some challenges from a

scalability standpoint. They may have something cooked up in the background, but … they have to figure out what

they want to be beyond wearables 1.0.”

Miscellaneous

“A lot of the innovation for wearables is going to have to come from the smaller guys, and a lot of these will be

acquired by the bigger companies. There are going to be IoT companies that want to have a wearable component to

them. They may want to have data analytics as well. … The next couple of years will see how it pans out.”

11. Executive at a semiconductor company

The source could not yet say which companies would be the winners and losers in wearables. Early players are

companies like Fitbit, Nike, Polar Electro, Samsung and Apple, but winners will not be hardware companies because the

margins will be too low. The value of wearables will be in the data. ARM-based processors are driving the industry, and all

semiconductor companies are architecting chips for the various applications. Three market segments are expected to

dominate: infotainment, fitness/lifestyle and healthcare.

Wearable Tech Market Potential

“Wearables are not at all hype. It’s not for the future, it’s a real thing now. There were 96 million wearable devices

shipped in 2012, predicted to grow to over 485 million annually by 2018 [ABI figures]. In 2013, there were 1.9

million smartwatches alone. The forecast by Gartner is for 20 billion units by 2020.”

“Some of the wearables are going to be completely disposable, even

digestible. They will include the smart ‘Band-Aid’ or an actual pill you can

swallow to monitor various internal things, and then be digested.”

“One of the market segments is infotainment—watches, glasses. A second is

fitness/lifestyle—sports monitors, heart rate monitors. The third is

healthcare, which will probably split into two subcategories: FDA-related

devices and the non-doctor things, where aging will be a big part.”

“There’s a disconnect that needs to happen between the data that a

wearable is generating and the service that is then offered. We will have to

decide that the data belongs to the user, who will then decide who gets to

use the data and offer a service back to him. For example, I’m wearing a

Garmin device and for now, all I can do is get on my Garmin account and look. Going forward, I may decide that the

data goes to my personal trainer who will create an exercise program from it, or my doctor who is tracking my

progress after surgery, or my insurance company who’s going to give me lower rates for being active.”

Wearable Tech Winners and Losers

“I don’t think there’s a good answer yet on the winners. I don’t think it’s going to be the device companies. There are

a million Chinese companies making all kinds of low-cost wearables. Most of those companies don’t know anything

about software or data. They’ll actually need someone to help them with that.”

“The value is in the data. It’s who manages and does something intelligent with that data who will be an important

and interesting player.”

The value is in the data. It’s

who manages and does

something intelligent with that

data who will be an important

and interesting player.

Executive, Semiconductor Company

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

18

Wearable Technology

“Somewhere in the middle there will be a cloud platform guy offering a data as a service as a model. I could register

my device with them and give permission for certain types of usage, where a service provider can have his

application connect to that data.”

“You can’t count out big companies like Amazon. Why wouldn’t they offer a service on top of EC2 and then connect

the Fitbit to their service? They would need to offer the service environment.”

“I don’t think there’s any money in the hardware of wearables. The margins start going away quickly with the

dramatic growth expected.”

“Any hardware company has to have a software play associated with it. Both

Fitbit and Garmin have created a social environment where you can

compete with your friends. The business models of these companies will

have to evolve beyond just selling a piece of hardware.”

“Even with 96 million devices shipped, it’s too early to say who the losers

will be in wearables. We’re still in the early phases. The winners as well are

TBD. Fitbit is probably on most people’s minds when they think of

wearables. Nike is also investing in this in sports. Polar, too, with the heart

rate monitor and smartwatches. Samsung is also doing a lot in this area.

Apple is coming out with new things. These are the leaders for now.”

“For the Chinese vendors, it’s a different game. Their cost of manufacturing

is so much lower, they can compete in a hardware-only type of business.”

“The companies making the devices will need help onboarding the device

into the service environment and on the other side, onboard the application

into that service environment and connect the data together. That’s the

problem that will need to be solved by these data as a service companies.”

“Most of the wearable devices shipped are ARM-based. The Cortex-M low-power processors are driving all the

wearable industry and will continue to do so.”

Miscellaneous

“Hardware is the new app. The wearable market is going to create a need for very wide variety of device types. This is

also true about the Internet of Things in general, with wearables just one market segment of the IoT. There will be

many device types and that will translate to different processor and silicon architectures and silicon designs inside

for the custom application. ARM’s licensing of their IP will allow the semiconductor vendors to produce the exact

right chip for that application. All the semiconductor companies have initiatives in this space.”

12. Marketing executive in the semiconductor industry

The value in the wearables market will be in what is done with the data that is collected. There will be monetization

opportunities for cloud and software companies in the transformation of data into actionable information. For now, it is

too early to say how and when wearables will ramp because the market is highly fragmented and has many applications,

some of which may not have yet developed. Also, the major players have not yet established themselves, but Google

should not be discounted. Gaming is likely to become a popular segment because it can immediately make use of the

collected data. The medical segment will take awhile to develop, but it has the potential for big growth.

Wearable Tech Market Potential

“I don’t think you can look at the entire wearables market and say when it will happen. It’s a highly fragmented

market with a large number of applications. Certain applications already have a significant ramp up while others may

take years to develop—because the infrastructure has to be developed to support it and not because of how

accepted it will become with consumers.”

“I think there could be dramatic sales growth in wearables, but where that’s going to be is hard to say at this point.”

“Trying to aggregate the growth figures when they represent so many markets can be a bit disingenuous because it

glosses over the successes and failures along the way.”

“Gaming will be a popular one because it’s a consumer segment, and there’s potential for a lot of different

applications. With gaming you can have a more aggressive ramp because you can actually make use of the data

immediately.”

“Medical will take a long while because it’s a market that’s incredibly conservative.”

Any hardware company has to

have a software play

associated with it. Both Fitbit

and Garmin have created a

social environment where you

can compete with your friends.

The business models of these

companies will have to evolve

beyond just selling a piece of

hardware.

Executive, Semiconductor Company

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

19

Wearable Technology

“[In the medical segment] if you target consumers, you’re looking at data which may or may not be meaningful and

hard to monetize. In relation to hospitals, insurance providers and doctors, the market is going to move very slowly

but could be worth more than $50 billion.”

Wearable Tech Winners and Losers

“There are going to be multiple levels of monetization throughout the entire supply chain. The real value will be in

what is done with the information.”

“Google didn’t just acquire Nest because it’s a cool thermostat. It’s all about the data that’s being collected.”

“The secret is how to convert [data] into information, and once you have that information, how do you convert it into

actionable information.”

“If you follow that data and follow it to the conversion that’s meaningful,

that’s where you’ll find all the value.”

“That’s where the opportunities [in wearables] are. It’ll be a combination of

both [cloud and software companies]. In some cases you’ll want to transmit

the data to the cloud for further processing into actionable information while

other data will have to be processed on site and only the actionable data will

be sent out.”

“Who is the end audience [for wearable devices]? If it’s people, you need to

have actionable information. If it’s another computer, like a game console,

then it’s more about real-time data and interfacing with another machine. In

that case, just data is fine.

“There’s also a concept of precision versus accuracy of the data. Relevance and quality of data are important, and so

are the aspects of the data to act upon.”

“Being able to sell information back to the utility companies has a tremendous value. Heart monitoring and being

able to communicate an aberrant event to the person’s doctor to request medical attention, that’s actionable and

powerful information.”

“There are some brand names like Fitbit, which I assume are seeing growth. But I don’t think the major players have

shaken out yet. I would never discount Google … because they know how to use and manage data and information.”

Miscellaneous

“This entire market is one that I believe will happen. But in terms of when we see broad mass-market adoption, I

think that’s going to take a while. It’s easy to have very inflated numbers, and maybe history will show us they were

not inflated. I think for now you still have to lay your bets on a lot of different vectors because it’s not clear who the

big winners are going to be. The wearables market and IoT will be about looking at who has a value proposition that

can withstand the test of time, generate real revenues, and grow into being able to address multiple markets with

different products. Who’s going to be able to monetize on the information that’s generated.”

13. Innovation executive at an electronics company

The wearables market still is searching for a device with a winning formula to boost adoption. The formula will require an

acceptable physical load for the user, easy interaction with the device, and fashion or conventional acceptance. Google

Glass fails with regard to conventional norms because of its asymmetrical design. A successful wearable device also will

provide useful information that cannot be collected in any other way. Monetization will come in the services that analyze,

compare and diagnose the data. The wearables market is expected to ramp from late 2015 into 2017.

Wearable Tech Market Potential

“There’s a winning formula in wearables, but we haven’t seen it pan out yet. It is different than in other consumer

electronics devices, and it makes it a lot more challenging to convince a general population to adopt it.”

“The social weight is a measure of whether a wearable is going to make it or not. This social weight is made up of the

physical, cognitive and conventional loads.”

“The physical load is having to wear it, and that’s an extra cost for the user because people don’t generally like to

hang things on themselves unless they get some value that they can’t do without.”

“Glasses can add value. They help you see, but otherwise you wouldn’t be willing to put them on. On your wrist is

more tolerable. Shoes are even more tolerable because you’d see the device less.”

This entire market is one that I

believe will happen. But in

terms of when we see broad

mass-market adoption, I think

that’s going to take a while.

Marketing Executive

Semiconductor Industry

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

20

Wearable Technology

“The cognitive load is the user’s interaction with the wearable. By nature, wearables are small because we’re limited

on how much we can carry attached to ourselves. There’s no large touch-enabled screen, no keyboard, no mouse, no

way of entering text or communicating with the device. That makes it challenging to design a user interface for

wearables. And most of the wearables today, including Google Glass, have no user interface, which limits them to

one or two functionalities.”

“Finally, there’s social convention. That’s an example of where Google Glass

fails. … They made serious design decisions that worked against them. One

was that it’s not a symmetrical look. … There’s also no way for other people

to know if the camera is on or not, and that’s created a concern about

privacy.”

“Ubiquitous computing will bring a lot of value for users. We will get there—

having a computing mechanism around and on us, all the time, sensing us

and monitoring us. But we first need to solve these issues. They should be

small and easy in their physical load, they should be very easy to use and

interact with, the cognitive load, and they should fit in with our social and

fashion conventions.”

“Early, successful wearables will not be about getting email or text

notifications. The broadly adopted ones will come from outside normal

consumer areas by providing the types of features that we do not have any

other way to achieve.”

“We’re going to see wearables start ramping in late 2015, into 2016 and 2017.”

Wearable Tech Winners and Losers

“[There will be monetization] for the device itself, whether it’s directly or indirectly, either through a B2C business

model or through a more complex revenue model like carriers who have financed phones, bringing down prices from

$700 to $200.”

“The example of the blood pressure monitor would require a lot of service, analytics, comparisons to other users, and

connecting with a medical service. My guess is most of the money will come from enabling those services.”

14. Hamid Farzaneh, CEO of Sensoplex

Companies like Apple, Google, Samsung and LG will be among the winners in the wearables market through their

multipurpose devices that will improve on current devices by Fitbit and Nike. Sensors will be important components in

wearables and InvenSense, STMicroelectronics N.V. (STM) and Bosch will be among the winners. Some of their success

likely will stem through acquisitions of startups that are developing technologies in these areas. Texas Instruments is a

big player in optical sensors. ARM is gaining in the industry because it provides the computing core. In another growing

area, Nordic Semiconductor ASA (OSE:NOD), Broadcom and Freescale are leading in the integration of BLE. Texas

Instruments and Linear Technology Corp. (LLTC) lead in wireless chargers, which will be coming down in price and add to

the appeal of wearables. Sports/fitness is one of the main drivers of the wearables market, which will be worth

approximately $24 billion in four years.

Wearable Tech Market Potential

“Sales in wearables are already growing.”

“The current primary driver for wearables is sports. The first generation of these devices was essentially step

counters with accelerometers as their only sensor. Some companies claimed to count calories, but that data was all

over the place. Generation 2.0 is now coming out, and it’s also focused on activity detection and monitoring but with

more sensors and better algorithms. These sensors, in addition to accelerometers, are gyroscopes and

magnetometers plus, in some cases, pressure sensors to detect elevation. The third generation is going to have the

same kind of improved activity detection and sensors along with some biosensors and/or environmental sensors.”

“The market size estimates [$3 billion to $50 billion by 2018] are big numbers and allow the imagination to fly. …

But if we were to really dissect the market, I would not even attempt to size the market for head-mounted optical

displays because it will be much smaller than anyone predicts. If we exclude that and look at the other main

markets, you have the sports devices, medical devices. Portable glucose meters will be the largest chunk with

numbers around 70 million per year. Looking at sports and wellness and activity devices, I can see that number over

There’s a winning formula in

wearables, but we haven’t seen

it pan out yet. It is different

than in other consumer

electronics devices, and it

makes it a lot more challenging

to convince a general

population to adopt it.

Innovation Executive

Electronics Company

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

21

Wearable Technology

the next five years growing to a few hundreds of millions of devices. With the added sensors, their average selling

price will probably be in the range of $60 to $80 in about three years. If the market is 400 million in four years and

the ASP is $60, that’s around $24 billion—not a bad market.”

“In order for a product to be attractive to the average consumer, it needs to be very comfortable to wear, it needs to

be light so that people can forget they’re wearing it. It also needs to do something people can’t achieve through a

smartphone. Google Glass, as it is today, is very limited. I don’t see consumers benefiting much from the current

Google Glass. The problem of smartglasses is that the optics are too heavy and cumbersome and the performance

too limited. It will probably take one or two generations of innovation in optics to be able to physically build

something that provides both a good value and a good experience.”

Wearable Tech Winners and Losers

“In three to five years the market will be divided into two different

sandboxes. One sandbox, which might represent 60% to 70% of the market,

would be driven by very large companies like Apple, Samsung, Google and

LG, and they will market multipurpose devices. The Apple Watch will

probably include most of the functions that Fitbit and Nike FuelBand have,

plus more. However, that won’t be good enough for serious athletes. For

them, there will be more vertically focused companies that will dominate

each sport. Some of these companies might not yet exist, and some are just

now emerging. … This also applies to devices made for seniors and their

families. These markets will be dominated by narrowly focused and highly

expert companies that really understand the related needs and

communities very well. Sensors will be an essential part in all the devices.”

“The companies that will benefit the most will be the pure-play sensor

companies. InvenSense recently announced two software company

acquisitions for which they spent some $80 million. Their approach is to

move up in the solution by providing not only the components but the

algorithms. That can be valuable, but from my experience, the payback is

mainly through increased market share rather than software revenue. I

think InvenSense, STMicro and Bosch will be on the lookout for startup

sensor companies.”

“For Gen 2.0 sports devices, the three leading sensor companies are

InvenSense, Bosch and STMicro, and they will benefit from the growth in

wearables. For the pressure sensors, there’s Bosch and some Japanese

companies. For Gen 3.0, which will include bio sensors such as heart rate

monitoring, TI is well positioned for optical sensors.”

“The problem with many sensors such as optical is that most of them are extremely sensitive to noise, and when

there’s motion, the amount of noise can be extremely high.”

“It’s not only the components that are important but the ability to integrate the components into a solution that is

precise and useful enough.”

“Intel is very actively working on platforms for the Internet of Things and wearables. But coming from the

semiconductor industry, we’re familiar with a lot of the projects Intel has tried to pursue over the years. They have

spent large amounts of money to acquire companies and technologies, but they’ve often been one step removed

from the customer and, because of that, have not always benefitted much.”

“ARM is gaining market share as the premier processor for wearables. My teams are currently developing two

platforms, and both are ARM-based. ARM provides the physical computing core and can run different kinds of

operating systems. Linux is one of the OS contenders for some of the applications but not ideal for portables that

require a very small footprint operating system. No operating system seems to dominate yet.”

Miscellaneous

“In a wearable device that’s easy to wear, the battery cannot be too large. We’re putting a lot of effort to minimize

energy consumption. But that said, it’s never little enough and there’s never a battery that is small enough or has a

ratio of energy to size that’s good enough.”

“People want to have longer battery life and not recharge every night as with their cell phone. But as you add more

sensors, the energy consumption skyrockets. … More capabilities and more precision are going to cost more energy.

I would not even attempt to

size the market for head-

mounted optical displays

because it will be much smaller

than anyone predicts. If we

exclude that and look at the

other main markets. … I can

see that number over the next

five years growing to a few

hundreds of millions of devices.

With the added sensors, their

average selling price will

probably be in the range of $60

to $80 in about three years. If

the market is 400 million in

four years and the ASP is $60,

that’s around $24 billion—not a

bad market.

CEO, Sensoplex

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

22

Wearable Technology

Displays also consume large amounts of energy. But the amount of energy is dependent on the volume of the

battery.”

“Systems integrators will play a key role, and industrial designers as well, to determine where we place the battery

and how large it can be.”

“Another area of great interest is the transmission of the data. Some amount of processing will be done on the

device so the raw data being collected can be reduced. But you still have to transmit that information to a smart

device and to the cloud. Currently, the preferred mode of wireless transmission is a variation of Bluetooth—low-

energy Bluetooth or Bluetooth 4.0. Component makers have the opportunity to increase sales very rapidly in that

area. Until a year ago, they were limited to the Apple devices and wearables. Now Android devices have also adopted

Bluetooth 4.0, and the number of devices is increasing. … Typically, it is companies that have adopted the ARM

processing core that are also adding Bluetooth low energy in a single chip solution. That will be a major area of

growth in the wearables industry.”

“There are also companies that are making antennas that are small enough and have a good performance. That’s

also going to be an area of growth. I think most of the companies involved there are medium-size and small ones.”

“Another trend is wireless chargers. You can put your device close to the transmitter, and through magnetic waves

they recharge overnight. Wireless chargers are still very rare these days. TI is one of the main companies in this, and

they have a solution. Linear Technology also has a solution. It is the traditional analog semiconductor companies

that have that technology. The technology used to be very expensive but prices have come down, and it’s now

attractive for wearable devices that are going to cost less than $100 for consumers.”

15. Wearable device strategy executive

The wearable tech segment still is being defined, so winners and losers have not yet emerged. Wearables will not be just

redesigned smartphones because design, personalization and customization are critical to this market. Major players like

Apple, Google and Samsung will bring volume to the segment, possibly with the release of the Apple smartwatch. Pebble

is a leader in the smartwatch segment because it has customized watches to connect to smartphones and has made

them widely available. However, the source cited room for higher-end wearables, perhaps from luxury watchmakers. The

component makers in wearables will be the same as those involved in the smartwatch industry, but work still needs to be

done in improving battery life, displays and sensors.

Wearable Tech Market Potential

“Sales are growing and projections are for more growth. You can imagine a percentage of all the glasses and

watches sold every year becoming connected devices. There’s huge potential. But it will take awhile to get there.”

“There will be a major, well-established players like Apple, Google or Samsung who will be able to bring volume into

this segment, who will demonstrate that the numbers are there.”

“Apple’s smartwatch will democratize the market in the sense of

awareness, even if not price. There will be room for other companies then to

fill in the gap in price points below and above Apple.”

Wearable Tech Winners and Losers

“It’s too early to tell who the winners and losers will be in wearable

technology. We’re still defining the segment.”

“Companies that understand that personalization, customization and

design are critical and that they come first and are able to execute on this

will be the winners. It’s not going to be about specs or features.”

“You’re going to see the industry of consumer wearables steer away from

spec sheets and what’s under the hood and focus on design, usability and

user experience.”

“The big players like Apple, Google and Samsung are waking up to this and

will address it. But they’re approaching it the wrong way. They’re taking the phone and shrinking it down.”

“Fitness bands are one-purpose devices. People wear them and forget them. They gather data that can then be

uploaded to track their exercise and health. They’ve become a commodity that you can buy for $10. Smartwatches

can do this and more.”

Apple’s smartwatch will

democratize the market in the

sense of awareness, even if not

price. There will be room for

other companies then to fill in

the gap in price points below

and above Apple.

Wearable Device Strategy Executive

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“Pebble is one of the leaders in smartwatches because they took the watch and evolved it in a customizable way,

with different bands, materials and colors and provided an added experience and value by connecting to the cell

phone via Bluetooth. And it is available even in stores like Target.”

“The smartwatch market is a particularly ripe wearable because people are familiar with what a watch is. You can

improve watches and make them connected devices—to add functionality

that are useful in this day and age.”

“The smartwatch is to the fitness band what the smartphone was to the

feature phone.”

“As far as component manufacturers, the sensors and displays are

important. All the component suppliers making components for phones are

going to benefit from wearables. The challenges here are in display, battery

and sensors. We need more efficient batteries, better displays that are

readable in daylight and are beautiful and low-power, and lots of sensors,

some of which are still costly.”

“Things like heart rate monitors … will become ubiquitous. The sensor manufacturers will benefit. Companies that

can make small, high-quality, low-power, daylight-readable displays are going to be the winners.”

Miscellaneous

“People with expertise in designing both jewelry and phones are going to be the winners. It’s not just sensors and

processors and displays and batteries. There’s going to be rich materials, like metals and sapphire glass that is used

in watch making. It’s going to become commonplace in consumer electronics.”

“The watchmakers have a potential in what they can do in this area if they can dive in and learn the skills of phone

makers.”

“You have to develop an integrated ecosystem around the wearable. You can’t shrink down the phone operating

system to a watch like Android Wear is doing. It’s not efficient and it’s overkill. Either we wait for more software and

you can have that kind of performance on a watch without sacrificing battery life, or we can put in lower-end ARM

processors running a lightweight, real-time OS that is much more efficient. It’s a better value proposition. There’s a

whole area of software expertise that’s going to become critical for smartwatch makers. Battery and display

technologies are not going to improve fast enough for consumers to get the performance in terms of battery life that

they want from smartwatches.”

“Removing a wearable to charge it introduces friction. You’re going to start to forget the wearable, but we want that

stickiness and users want that stickiness. The companies who do this will win.”

2) Industry Specialists Five of six sources expect meaningful wearable technology market growth during the next three to five years. Two of these five

sources offered growth forecasts: One predicted a 3% to 5% increase if the Apple Watch is not launched until 2015 and 15%

to 20% if it is released next year. The other thinks 25% year-to-year growth is attainable. One source said Google Glass

interest among consumers has stalled, another said enterprise applications for smartglasses are on the rise and that Google

Glass will have 70% to 80% of the market, and a third said sales of activity and fitness bands have plateaued. Market

categories expected to drive wearable device growth include health and fitness, medical, watches and enterprise

applications. The market is highly fragmented; more than 40 companies were discussed by these six sources. Those

frequently mentioned as possible winners were Apple, Samsung and Google. Market challenges include developing a

meaningful application that integrates into consumers’ everyday lives; providing more meaningful contextual data, privacy,

security and device battery life; and improving sensor technology and device durability.

KEY SILO FINDINGS Wearable Tech Market Potential

- 5 of 6 expect meaningful wearable technology market growth over the next 3 to 5 years.

- Growth projections ranged from 3% to 25%.

- Health, fitness, medical and smartwatches are expect to be the growth drivers.

Wearable Tech Winners and Losers

The smartwatch is to the

fitness band what the

smartphone was to the feature

phone.

Wearable Device Strategy Executive

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

- 40 companies were discussed by these 6 sources.

- Most frequently discussed were Apple, Samsung and Google.

- Google Glass has failed in the consumer category.

Miscellaneous

- Potential roadblocks to widespread adoption include the lack a meaningful application that integrates into

consumers’ everyday life, the lack of more meaningful contextual data, privacy, security, device battery life, and the

need for improved sensor technology and device durability.

1. Ori Inbar, CEO and cofounder of AugmentedReality.org, a nonprofit tracking the wearable industry

The market for wearable devices will surpass the success of the smartphone, with enterprise adoption of smartglass

devices already underway by large companies. Consumer adoption for wearable devices will occur slowly; critical mass is

expected between 2017 to 2020. Smartglasses are poised for sudden growth by mid-2015, fostered by the release of 10

new smartglass devices this year. Google will be the main beneficiary, followed by Seiko Epson Corp. (TYO:6724) and

Vuzix Corp. (VUZI). Apple, Samsung and Motorola will gain traction as wearable device adoption gains momentum. Within

the supply chain, market share battles are in progress; Qualcomm, Nvidia Corp. (NVDA), Intel and Texas Instruments are

competing for CPU/GPU dominance while InvenSense and Plantronics Inc. (PLT) are vying for the sensor market. Still

under the radar but crucial to expansion are companies that make input devices to track eye, muscle or voice input, a

segment dominated by startups.

Wearable Tech Market Potential

“My focus is on a specific area of wearables; I have the most insight into smartglass products. It is definitely an

important year for this slice of the wearable market. It’s the first time you’ve seen 10 new smartglass products

released. Before this there really was nothing.”

“I would estimate by the middle of next year there would be 1 million

[smartglass units in circulation]. Prior to this, we only have seen a few

thousand units in the marketplace, mostly in the fields of research and the

military. We almost have to say things are starting at zero, so obviously

sales will jump. There were several thousand units out there, so in the next

year we could see a 1,000% increase in units [year to year]. The percentage

does not say a lot about sales. It says more about units and interest.”

“In the smartglass segment no specific product is hot, and in the consumer

space there is nothing comparable to the smartphone. In enterprise and

business, the larger Fortune 500 companies are driving the market and

buying smartglasses. On the consumer side, they are still too bulky and

pricey. But Google is finding a market in large enterprise.”

“Looking at the entire wearable market potential, it’s useful to look at the

smartphone market. When [wearable tech] takes off, for every smartphone

sold there will be something on glass, on input devices or on the wrist. When

will it hit the mainstream? Probably between 2017 and 2020.”

“If you look at the smartphone market you can gauge the trajectory of

growth. It took about 10 years, from when smartphones were first

introduced. Smartglasses started a couple of years ago. Adoption by

enterprise is happening now. Everyone is looking at the imminent release of

the Apple Watch, which could change things for the market. The wrist will be

the first area to take off when wearable’s become common.”

“Looking at the market, we see fitness and health leading, and that will continue for the next couple of years.”

“In the area of my focus, namely smartglass, [consumers abandoning their wearable devices] has not been the case

because the value of the device has gained attention and interest. We especially see the use cases increasing and

growing adoption in enterprise. SAP [AG/SAP] has shown a tremendous interest because of the feedback they’ve

gotten. Wal-Mart [Stores Inc./WMT], Verizon [Communications Inc./VZ] and others have shown interest. The

aerospace industry has been big on [smartglass], with interest from Lockheed Martin [Corp./LMT], the Boeing

Company [BA] and [Boeing’s] McDonnell Douglas and not just for military uses.”

I would estimate by the middle

of next year there would be 1

million [smartglass units in

circulation]. Prior to this, we

only have seen a few thousand

units in the marketplace,

mostly in the fields of research

and the military. … With

another nine to 10 smartglass

products released this year, we

could see a million units. Of the

million units, Google will

account for 70% to 80%.

CEO & Cofounder, Nonprofit Tracking

the Wearable Industry

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“With another nine to 10 smartglass products released this year, we could see a million units. Of the million units,

Google will account for 70% to 80%. The remaining percentage will come from companies like Vuzix, which struck a

deal with Lenovo [Group Ltd./HKG:0992] to resell smartglasses in China. Epson is making an impact through its

projection technologies, using the projector for eye display. … Meta is a Silicon Valley company. Recon [Instruments]

is selling mostly for sports, skiing and bicycling. And then there’s Google Glass. I do think it’s possible that there

could be acquisitions … in the next two years.”

“Apple, Microsoft and Samsung are starting to move in to the market, but I would look at 2016. Sony

[Corp./TYO:6758] is big along with Canon [Inc./CAJ] and LG. All of these guys are looking at the market and slowly

getting into it. All of them are watching what’s happening, but they have not launched their own products.”

Wearable Tech Winners and Losers

“It is way too early to predict the winners for smartglasses. Google was a pioneer. Epson and the others mentioned

before are all players, but it is too early to pick a winner.”

“In the next year or two, the 800-lb gorilla will take its position. Everyone expects Apple to lead, with Samsung and

Motorola following as they did in the smartphone market. … Samsung has already made a bunch of attempts without

success. Motorola announced a new development, and it’s gotten good feedback but has not yet reached market.

Pebble is the darling of the startup world, but Apple can wipe them out with one announcement. Facebook acquired

Oculus for wristbands, but that is not exactly in the same space we are talking about. Amazon has shown a strong

interest in wearable technology and has made some strong hires from Google Glass.”

“Looking at the supply side from the bottom up, there is a fierce battle going on for market share at the CPU and GPU

level between Qualcomm, Intel, Texas Instruments and Nvidia. So far Texas instruments is doing well with its low-

energy Bluetooth. Qualcomm is a leader in mobile devices and is trying to make the jump to wearables. Within this

group there will be winners and losers at some point. The next layer is sensors and cameras, as well as batteries,

and there’s a big battle going on there. For sensors we have InvenSense and Plantronics. And for cameras, the big

ones make in-depth cameras and a Microsoft Kinect base. There are a few others like Softkinetic and Movidius in

this space, and we will see some winners in the area soon. I suggest you look at Google’s Project Tango with

attention to the names of companies and its partners section”

“You can also look at the software that goes into smartglass or other wearables. We will see some big developments

from these augmented-reality companies, but today they are mostly seeking investors. Companies in this layer

include Daqri, APX Labs and Metaio [GmbH]. There are a couple of others creating tool applications. Blippar is one of

the fastest-growing companies in augmented reality.”

“Companies making smartglasses include Google Glass, [Epson’s] Moverio, Vuzix, Lumus, Optinvent, Meta, Recon,

Atheer Labs, Laster [Technologies] and Glassup.”

“One area of importance but under the radar or overlooked has been input devices. With wearable devices, there is

no mouse, no touchscreen and no keyboard to enable the wearable to interact with the things around us. Overlooked

are the natural user interfaces like a ring, so you can just point at things for input. There is [Thalmic Lab’s] Myo

motion and gesture-control armband that reads muscle movement.”

“There are a bunch of startups in the input area, but no one leads. Intel has invested in the area. Leap Motion makes

a computer hardware sensor device to support hand and finger motion for input. The Myo armband is promising.

Muv Interactive and Nod [by Variable Inc.] allow you to point at things for input. So far we don’t know who leads.”

“Some of [the startups] have had [financing] success on Kickstarter, and now there is more interest from venture

capital. But all of them have used the Kickstarter model to get their products on the market, which is a year away.”

Miscellaneous

“Security and privacy are friction points. We will get used to wearables and concern will subside.”

“Everyone will eventually be wearing them because of the benefits and value. You will be left behind if you don’t have

a product. We’ll get to the point where you won’t want to send your kids to school without a smartglass device so

they don’t fall behind in their work. Exactly when this will happen, I don’t know. I can tell you the market is imminent,

and hedge funds and other investors focused on developments within the next three months, six months or 12

months need to look farther out.”

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

26

Wearable Technology

2. Former employee for a component company that supplies early prototypes for the Google Glass

This 56-year-old sound installer for a major movie studio said wearable technology such as Google Glass has hit a wall

with consumers because of price and application functionality. As a former worker for a company that manufactured

components for early prototypes for the Google Glass, he said the medical practitioners and possibly the energy sector

stand to benefit the most from anything produced during the next few years. Consumers are just not embracing the

technology because of price and cultural gaps. Fitbit is a good product but likely will get swallowed up, alongside Pebble

and other smaller companies. Apple could gain share but is late in the game.

Wearable Tech Market Potential

“I used to work for a company that manufactured some of the smaller components for the prototypes for the Google

Glass, and I had an early pair. I thought the smartglasses were cool, but I found myself tossing them in a drawer a

few months after getting a pair.”

“Average consumers are priced out of the market for Google Glass, but

there could and probably should be some very real possibilities expanding

use of the product in the medical and energy sectors. Those areas are

where the technology across the board is price-to-purpose balanced.”

“Fitbit has reached a market plateau with consumers. If they don’t do

something different with it … they will likely be swallowed up by the big guys

making the smartwatches, like Samsung and LG.”

Wearable Tech Winners and Losers

“Apple’s getting in the game a little late if they intend to release a

smartwatch anytime in the next few months, and certainly they must know

that. But I would expect a lot of people are waiting to buy a smartwatch until

after they see what Apple puts out there.”

“Garmin will stick to GPS services if they’re smart. They have that cornered,

and they do it well. The other guys, like Fitbit and Pebble will probably get

sucked up by the larger corporations like Samsung and LG because those

companies will be putting out better products that do all the same things; plus, they’ll be working on expanding the

options for apps and more direct email and voice technology.”

Miscellaneous

“Business is ready for things like Google Glass, while consumers are still trying to get comfortable with

smartwatches. There is a large gap in income to product pricing to fill before it hits critical mass with consumers.”

“I just won’t likely be one of those wearing Google Glass or other forms of technology like that because it’s just not a

must-have for me. I would probably use it for about a month and then forget about it.”

3. Wearable startup executive and industry specialist in Boston

Apple will lead the way in wearable devices and bring in more users. Jawbone is working to deliver more digestible data

that can be interpreted for everyday life. Motorola and LG may become potentially serious players while STMicro, LG and

Samsung may play relevant roles in the supply side. Wearables still need to provide more meaningful and contextual

data, and integrate into day-to-day behaviors. Battery technology and durability are not yet considered enough in the

wearables industry but are crucial to successful adoption.

Wearable Tech Market Potential

“I see a large-scale, broad increase in sales across the board. I’m not sure it’s matching some of the projections that

you have seen from some of the industry research groups over the last five or six years. I would say sales would

increase somewhere around 25% year over year.”

“There will be continued growth. It’ll really depend on what Apple comes out with. It’s one of the areas where you can

see new customers getting into the space. Today, with all of the people who have been buying into the wearable tech

space, there’s been some repeat buying and some potential new folks who are a little bit timid about making

purchases.”

Business is ready for things like

Google Glass, while consumers

are still trying to get

comfortable with

smartwatches. There is a large

gap in income to product

pricing to fill before it hits

critical mass with consumers.

Former Employee

Google Glass Supplier

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

27

Wearable Technology

“There’s going to be a lot of people who will buy into wearables because Apple puts its stamp of approval on it. Even

in the delay it will push a large number of units even if it’s not very good, because it’s an Apple device.”

“I’m not sure if smartwatches are doing what they need to do. We’re not getting the right mix of form, function and

aesthetics. We’re not going to see a ton of growth in the Android smartwatch space beyond 10% to 25%.”

“The explosion for wearable tech is still three to five years away. That’s driven by two things. One is battery [life]. Two

is, more importantly, sensor technology. We need more and better sensor technologies to make these devices truly

worth strapping to your wrist.”

“Fitness is a big component of it but not necessarily going to lead in

wearable tech adoption. The market is quickly breaking down into whole

different segments. GPS watches have been around a long time; people are

only starting to call them wearable electronics. If you break down the day

into a 23-and-1 sort of thing, you’ve got lifestyle and active fitness. There will

still be a lot of devices for that one hour a day. There will also be lightweight

fitness trackers for people who don’t want a more complicated smartwatch.

Most of the smartwatches can’t stand on their own. The real price is a

smartphone plus a smartwatch. Most of them are way too big.”

“Apple stands the best chance of getting beyond that early adopter in that

bulky smartwatch space and grabbing that market. Apple may drive where

Samsung, LG, and Motorola haven’t been able to. There’s going to be a huge

amount of growth in the application specific fitness tracker.”

“Fashion will play a large role. Michael Kors [Holdings Ltd./KORS] is building

up a new innovation and technology team in New York. To get early adopters

to majority adoption, you need aesthetics; that’s a large part of the

experience of wearing electronics on your body all day. While people have

welcomed electronics into their lives, you’re starting to see information

electronics fatigue. You want to be able to iterate those devices in a way where they feel really seamless and don’t

get in the way. If you’re going to wear Google Glass, the reward in terms of functionality is going to have to be really

high for you to put it on and walk around with it all day.”

“[Nike calls users tossing their devices aside] ‘the leaky bucket.’ … There’s a lack of stickiness. Once you know what

your score for the day is or how many calories that you’ve burned and those numbers don’t change a lot, you think,

‘I’ve connected a number to an experience, and I kind of now get that.’”

“I don’t think the [Samsung] Galaxy Gear is really doing anything past that. What Jawbone is doing right now trying to

provide deeper insights around sleep. It’s interesting to look at that data and provide some context. It’s not perfect in

closing that positive feedback loop, but they’re doing more with that data that’s insightful.”

“You need deeper and more meaningful contextual data. The sensors that come off this data need to be more viable.

Just tacking an accelerometer on your wrist doesn’t give you enough data even beyond these six months. What

they’re able to give is really shallow and peripheral. That’s why you see companies trying to go towards heart rate

and blood pressure, with accurate or potentially borderline clinical applications.”

Wearable Tech Winners and Losers

“Fitbit is going really wide by going outdoors in various retail environments. I’m not sure they’re building the right

consumer experience or that what they’re doing is making sense long term.”

“I like what Jawbone is doing even though I have questions about their engineering quality. They’re taking the right

approach to try to make the data more contextual to my life. Jawbone is more in the driver’s seat, especially with

Nike backing out of the hardware.”

“Apple is going to be a winner in this space. I know they have a hardware ecosystem. They don’t do software

experiences well. … I think their success will be focused on how well they can support their developers. Depending

on the functionality of the Apple Watch, there’s probably a 12- to 18-month ramp. That may be why they’re not going

to launch the products in September, to give the developers time to launch some applications.”

“Samsung is throwing spaghetti at the wall. LG and Motorola seem to get the aesthetics much better. Samsung is

doing heart rate monitoring, which isn’t really working well. They don’t want to miss wearable tech so they’re

releasing a product every six months.”

“If Motorola can stay relevant in this space, it kind of gets it with the [Moto] 360. LG kind of gets it with the round

faces, and better aesthetics are form factors. They’re poised to potentially continue to be serious players.”

I see a large-scale, broad

increase in sales across the

board. I’m not sure it’s

matching some of the

projections that you have seen

from some of the industry

research groups over the last

five or six years. I would say

sales would increase

somewhere around 25% year

over year.

Wearable Startup Executive &

Industry Specialist

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“Garmin is going to continue to struggle. Someone’s going to come in and apply a lot of the tech for smartwatches

and fitness trackers. There’s a huge gap for someone to come in and crush the market for GPS fitness watches.

There’s a space for someone to make a couple million units a year and turn a big profit. Garmin has so many

features in these things. They sell for $700 a pop and sell 2,000 of them a year. Longer term, they’re not

innovating.”

“Fitbit is currently selling a lot of units. They have some cheaper devices like the Zip. They’re blowing out products

that really are just pedometers without a strong experience. Eventually they’re going to cycle through a lot of people

who don’t want to go back to the devices they’re selling, and they’ll kind of be stuck.”

“Nike has both lost and won. They backed out of hardware because they became afraid of what Apple was launching.

They’ve hitched their wagon to Apple.”

“I could see Nike getting back into wearables eventually and building a

much larger business in wearable. They have more authenticity in the

athletic and fitness space. They could come back in 18 to 36 months and

do something interesting, especially as some of the technology advances.”

“Microsoft is eventually going to jump off the shelf and get in the game.

They just don’t have a platform right now to plug it into. They’re going to

have to decide whether they want to do business with Android or iOS.”

“I still think Google Glass will grow but not as a consumer play. It’ll be a

business-to-business play: doctors, industrial workers, things like that.

There’s a market for what they’re going to be coming up with in the future.

They shouldn’t have led with consumer.”

“There’s a few players right now. I think STMicro is doing a really good job

for some of these more application-specific devices. Samsung and LG are

going to be large players in the space, whether or not they’re making a lot

of wearable devices themselves. They’re driving a lot of innovation in

display and battery technology.”

Miscellaneous

“The big problem in the industry right now that people aren’t talking about

is battery technology. Getting the energy density and form factor for those

batteries in terms of shape, chemistry and density is needed. There’s a lot

of these Android Wear smartwatches that are just a takedown on the phone, and it’s not power-efficient. There’s a

middle ground between having almost no operating system on a Jawbone and having basically a phone on your

wrist.”

“One thing that is different in wearable devices is durability. A lot of companies don’t think about this at all. There

have been recalls of Jawbone and Fitbit. Nike was the only company that didn’t have any recalls for a long time.

That’s a testament to engineering.”

“Deeper sensor technology that allows more feedback about what’s going on in my body is a big part of the future of

wearables. The big direction is biometric authentication and mobile payments. It’s going to go away from notifying

me every time I’ve got an email and integrating in my life in a way that allows me to keep my phone in my pocket for

interacting in my daily world. Deeper reading and apps will stay on my smartphones. Wearable tech woven into

fashion or apparel or footwear that will give you more smart information. It has to happen in a much more passive

and less intrusive way that feels like it’s a part of my day-to-day life. You’re going to see a large consolidation in the

wearable tech space for a while. There will be more technology-specific plays that will be relevant in the industry in

the near term.”

4. Founder of an online publication covering men’s fashion and technology

Wearable technology is here to stay, but growth will be slow and gradual. Apple and Google are probable winners in the

next 12 months. If Apple releases the device in the next three months, the wearable tech market could see a 15% to 20%

bump. This source expects Apple to introduce the Apple Watch early next year, which would push industrywide growth to

3% to 5%. He expects the overall market to grow into $5 billion market by 2018, with widespread adoption by 2020.

Fitness leads the market, but health and medical uses are growing fast. Jawbone’s activity device and Samsung’s

Apple is going to be a winner in

this space. Their success will

be focused on how well they

can support their developers.

Depending on the functionality

of the Apple Watch, there’s

probably a 12- to 18-month

ramp. That may be why they’re

not going to launch the

products in September, to give

the developers time to launch

some applications.

Wearable Startup Executive &

Industry Specialist

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

29

Wearable Technology

smartwatch remain popular, but Google Glass may have lost its appeal on the consumer side. Fashion, design and

wearability will become increasingly important; brands like Burberry Group PLC (LON:BRBY), Diane von Furstenberg and

Ralph Lauren Corp. (RL) already are working on smartgarments. Smartfabrics are not squarely in the wearable tech

sector, but the segment is growing fast, with companies like Clothing+ making an impression on technology players.

Wearable Tech Market Potential

“There are wearable technologies coming out every week, and we focus on what we think looks and functions well in

men’s wear. Over time there has been an increase in use of and interest in wearable technologies. It is a growing

market. Right now the big thing is the smartband and the smartwatch, the latter being driven by Samsung. We see

more fashion brands getting involved with wearables, especially on the female side.”

“As for sales, I expect to see an increase in the next three months if Apple

decides to release the Apple Watch this year. If it does, we may see a 15%

to 20% increase in smartwatch sales this year. However, I don’t think

Apple’s iWatch will be available until next year. If Apple doesn’t release in

the next three months, I think wearable sales will increase in the 3% to 5%

range.”

“There are not too many others coming out with wearable devices for the

rest of this year. Sony has talked about releasing a smartwatch next year,

and Swatch [Group Ltd./VTX:UHR] also has announced the release of a

smartwatch next year. In the next year overall I think wearable technology

will grow 25% to 30%, but we are not yet at the point where … everyone has

a wearable device. The adoption will be slow with a gradual increase and

interest in wearables, especially for the already available products such as

watches and bands.”

“The biggest seller right now is the smartband or the activity band. There

are a number of companies driving device sales, such as Jawbone. We also

see some smartshirts coming to market. Ralph Lauren just launched its

Polo Tech Shirt at the U.S. Open.”

“Specific numbers on market potential are hard to find. If I had to pick a

number for the market potential, it would be closer to $5 billion by 2018.

Large-scale adoption will be gradual and slow. It will not occur overnight. I

think we’re looking at widespread adoption by 2020. The pace depends on

Apple and Samsung, and on the fashion side Burberry and Diane von

Furstenberg, two fashion brands that are getting into wearables. At some point there will have to be collaborations

between the developers of wearable technology and the leading fashion companies. Personally I don’t think this will

happen in the near term; we should look further out to 2020.”

“Fitness is in a leadership position, followed by a tossup between health and enterprise. Fashion is a big area, but

when it comes to sales, much more money is being invested in health.”

“Many wearable text users [wearing wristbands or devices that display text only] abandon devices. It happened to

me. I bought a Jawbone. When I first got it, I thought I would use it all the time. Now I only use it as a sleep tracker. I

started using it less after three months, in part because I’m not very active.”

“I would not say consumers are flocking to wearable technology. But I also don’t think the potential for the market is

overblown. Lots of activity trackers are out there. Although that market may be a little saturated, we are going to see

a gradual increase in use of wearable technology.”

“Overall I think wearable technology has a long way to go, but eventually we will see embedded devices such as

sensors in wearable merchandise. I think the Google Glass thing has worn off on the consumer side. There’re two

reasons: First, you have to go back to the fashion issue. Google Glasses simply look bad. We have to get to the point

where people want to wear a device, but it has to be aesthetically pleasing. Second, concern over security and

privacy is a big thing. People are uncomfortable releasing personal information. There are a lot of things about

Google Glass that need to be fixed. But it is not going away, and it has done a lot to raise awareness.”

Wearable Tech Winners and Losers

“The winners would have to be Google and Apple. They are driving the market. There are a number of independent,

smaller companies that also will be winners.”

As for sales, I expect to see an

increase in the next three

months if Apple decides to

release the Apple Watch this

year. If it does, we may see a

15% to 20% increase in

smartwatch sales this year.

However, I don’t think Apple’s

iWatch will be available until

next year. If Apple doesn’t

release in the next three

months, I think wearable sales

will increase in the 3% to 5%

range.

Founder, Online Men’s Fashion &

Technology Publication

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

30

Wearable Technology

“I don’t yet see any one company losing. Some Kickstarter companies may fall behind due to lack of money. And at

the end of the day, the losers may be brand names you’ve never heard of.”

“Apple will see substantial sales growth when they come out the Apple Watch because sales potentially will jump

from 0% to 70%. From what I’ve heard, they are still working out the kinks. They have been talking about the Apple

Watch for so long they almost have to show something to the public at their annual show in September to generate

continued interest.”

“I can’t speak to the supply side. I’m not familiar with the players.”

There also are a lot up-and-coming brands that are not necessarily working in their own specific device but rather

consulting with larger companies. One of them is Clothing+. Most of the startups are trying to take a bandage of the

fitness sector. Other new wearable brands include [ConnecteDevice’s] Cogito smartwatch has a smartband with an

embedded NFC chip. The band is nothing special, but the chip is.”

Miscellaneous

“There are a lot of brand-name companies that do not make devices per se, but are part of a fashion industry group

making smartfabrics and textiles. Mizzen+Main, for example, is the men’s wear company making performance

dresswear shirts for men. They have taken the fitness approach to creating fabrics that wick moisture or dry quickly

and combined it with a tailored design in an upscale men’s shirt. These textiles are not wearable devices, but they

are certainly considered smartfabrics, and we are seeing significant growth in this area.”

5. Lubna Dajani, principal at Stratemerge and active in initiatives on wearables, 3D, AR, cashless payments and IoT

Adoption of wearable technology continues to evolve, led by fitness and healthcare applications. Because Ms. Dajani

advises numerous wearable startups and enterprise companies developing technologies, she declined to pinpoint

winners or losers. Activity trackers and wearable health monitors are popular, but smart textiles and clothing are

beginning to gain traction. Key players in the supply chain are the manufacturers of embedded technology, biosensors

and connectivity components. The pace of growth could be tempered by the development of strong privacy controls, and

any security breach would undermine the wearable market. Widespread adoption of wearable devices just now reaching

the commercial market could take another five years.

Wearable Tech Market Potential

“Of course the field of wearable technology is increasing. As a whole,

wearables are here to stay. They will not only be worn but will become

increasingly important and play a bigger role in our lives, not just as

commercial fashion products but overall in the fields of healthcare and

medical monitoring. It will not be here tomorrow, but it is coming.”

“Estimating market potential and size in part depends on what definition

you use for wearable technology. Are you just talking about fashion and

fitness or does the market include shoes, garments, clothing and devices

for the military and devices and healthcare products. Obviously the fastest-

growing area is fitness. Fitness is leading growth in field now. Fashion is very

big. Enterprise has seen growth but that is a different game.”

“We also will see wearable technology and smart clothing. There are already

fabrics with embedded sensors and smart garments that have the ability to

measure vital signs and then transmit the information to other devices.”

“The pace of growth will be influenced by security and privacy. If anything

happens in the next 12 months, it could influence the growth rate and even

affect what direction the market takes. All of these elements play a big role

in determining how quickly the market develops. There also are questions

about who will control the information. That is where the consumer will weigh in. The insurance companies are very

keen on this stuff in the areas of medical and health. I would urge them to be keen on it, not just so that they can get

you to buy or take more drugs.”

“People do discard devices after a few months. I don’t know if they are not lasting long enough or whether people

break or lose the devices. It is possible they may change from one device to another, because newer features are

more appealing.”

As a whole, wearables are here

to stay. They will not only be

worn but will become

increasingly important and play

a bigger role in our lives, not

just as commercial fashion

products but overall in the

fields of healthcare and

medical monitoring. It will not

be here tomorrow, but it is

coming.

Principal at Stratemerge & Active in

Initiatives on Wearables

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“A more meaningful question is, how do the devices make a difference in our lives? Do they add or improve our

experiences? Continuing use a device may also depend on how well the increasingly available apps integrate. It

doesn’t matter how pretty the device is. It is more about how they are designed and connect. Mostly it’s about

experience, and that often depends on whether the application adds to our lifestyle. When I talk about applications, I

also mean how simply devices interact, how simple it is to use and how seamlessly it integrates with your phone. Is it

integrating easily or does the device give you more stuff to do?”

Wearable Tech Winners and Losers

“I cannot identify leading startups or large company players because I am a consulting adviser for many of them and

I do not want to advance one company over the other. We also have to wait to see what happens when Apple comes

out with its Apple Watch.”

“Everyone in the supply chain will play a part in the development of wearable technology. There are many layers any

we may see new levels of supplier input as the market involves. The most significant companies will be developers of

embedded technologies. Companies that work on security are very important. Companies that enable the control of

privacy and identity are essential to the growth of this market. Companies that work on connectivity also will

contribute.”

Miscellaneous

“It will be a whole, new world in five years. Right now those who use wearable technology are early adopters. How

long will it take before no one would think of leaving home without a wearable device? How long did it take to adopt

the smartphone?”

“I coined the phrase ‘Allternet.’ In the Allternet age, everything will have an IP address and will be part of the digital

grid, making the Allternet as fundamental as the atmosphere around us. The Allternet will add a digital dimension to

our lives within which our own senses, emotions and spirituality are expressed and mobilized. Today people are

already expressing their sentiment, intent and aspiration as well as capturing their life logs and executing

transactions online. As more and more of this data is stored and mined, profoundly powerful knowledge and insights

can be harnessed to an extent never before conceivable.”

6. Veteran computer scientist and technology consultant with expertise in pervasive computing and mobile devices

Wearable technology has been in development and used for decades, yet the products coming to market demonstrate

few significant advances. Most commercial devices lack wearability or aesthetic appeal that would be compatible with

everyday consumer lifestyles. Some medical, health and fitness devices hold value and could evolve into a $3 billion

market by 2018 if manufacturers and developers can improve on design. The source expressed concern over privacy and

how collected data would be used and secured. The smartclothing and smarttextile segments could grow into a viable

industry in five years.

Wearable Tech Market Potential

“I’m pretty skeptical about the hype. None of what I’ve seen lately is particularly new or improved upon. And I think

the agenda of mega-corporations turning us all into their personal data feeds is to be viewed with extreme caution.”

“Some devices have been useful and functional, especially in the area

exercise, because the devices add value. Growth would depend on how the

clash between privacy and technology evolves.”

“If you are spitting data into the cloud, will you know how your information is

being used or who has access to it? Look at Apple and Google with the NSA

activity. With wearable technology, it’s not just about whom you are calling;

now the information is more intimate. It’s about your heart rate and

breathing and personal habits. For most companies, the value is in the data.

It’s not just about selling hardware and software. It’s possible that you’ll

have sensors on your phone, and then companies will only have access to

raw data. But that is not where the commercial activities have gone in the

past.”

“Fifteen years ago when I worked in the labs in Palo Alto, all of us were

wearing smartwatches and personal digital systems. People were building

the things that you see coming onto the market now. The technologies been

I’m pretty skeptical about the

hype. None of what I’ve seen

lately is particularly new or

improved upon. And I think the

agenda of mega-corporations

turning us all into their

personal data feeds is to be

viewed with extreme caution.

Veteran Computer Scientist &

Technology Consultant

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

32

Wearable Technology

around for a while, but I don’t think there have been many advances in how these things fit with people and their

lifestyles. Google Glass is the perfect paradigm.”

“There is room for a lot of creativity. There have been advances in the field of reactive textiles and fabrics that use

embedded sensors. If companies can get the aesthetic right and get the devices to fit into the consumer’s lifestyle,

the smart clothing angle might work. A lot of people are working on smart textiles, but mostly we still see the

garments at high-end fashion shows.”

“I would imagine some materials might become mainstream in the next five years, that is if they can keep the cost of

the fabric down. More recent advances have been seen with interactive jewelry, using it as an input device or to

activate movement. But technology companies are really bad on the creative side and at making things that are

actually useful to people.”

“I really can’t answer questions about potential size of the market. It’s possible that the medical and health sectors

would become viable markets that could top $3 billion by 2018.”

“People toss devices because the aesthetic does not fit with their lifestyle. Only a certain type of person wants to

know their calorie intake or the number of steps they’ve walked. It’s not surprising that people stop using devices.”

Wearable Tech Winners and Losers

“The aesthetic for some devices is all wrong. Devices that go on the wrist and Google Glass, for example, make you

look nerdy. It’s hard to make consumers embrace a lifestyle that is not really their own. We brought in Google Glass

here at work, just to give it a try and test run. It got a really negative reaction.”

“The Oculus wristband still makes people nauseous … due to the lag time between moving your head and visually

looking at your wrist. It confuses the brain. People may find a use for it in the home, but it enables a very isolating

experience and the device is clunky.”

Miscellaneous

“Looking at the aesthetic and lifestyle aspect, I can imagine a market for technology that enables a lifestyle

experience and the devices could be throwaways. But then the market would become a platform industry and the

thing that you wear would be disposable. This would be an area for somebody like Disney. I could see developing a

wearable asset that goes along with an experience or real-life gaming. … The wearable is not the thing; the wearable

simply would enables the experience.”

3) Wearable Tech Retailers Three sources representing national sporting goods retailers and six representing national tech retailers expect sales of

wearable devices to grow further. Sources’ growth estimates ranged from 10% to 100%, mostly based on demand for

fitness/health, smartwatches and fashion. Fitbit, Nike and Samsung are the current sales leaders, but Apple is expected to

dominate once it releases its much anticipated smartwatch. The wearable technology market is fragmented, with sources

mentioning 15 companies that have a stake in the space. Players that may be challenged as competitors’ technology

improves include Garmin, Pebble, Martian Watches, Polar Electro, LG, Motorola Solutions and JBL (Harman International

Industries/HAR). Market headwinds include limited consumer awareness, the need for more functionality in the bands and

watches, a lack of integration between devices, and the lack of a must-have device.

KEY SILO FINDINGS Wearable Tech Market Potential

- All 9 sources expect the wearable technology market to continue its expansion.

- Growth projections ranged from 10% to 100% year to year.

- Health and fitness applications and devices are driving growth.

Wearable Tech Winners and Losers

- Current market leaders include Fitbit, Nike and Samsung.

- Excitement for the release of the Apple Watch is high, and Apple is expected to dominate the market when the

smartwatch is release in early 2015.

- Companies that will face greater competition as wearable technology improves are Garmin, Pebble, Martian, Polar,

LG, Motorola and JLB.

Miscellaneous

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

33

Wearable Technology

- The lack of consumer awareness, limited device functionality, and a lack of must-have devices and meaningful

applications will slow adoption.

- 1 source said employers are encouraging their staff to purchase and use health/fitness bands.

1. Apple store assistant manager in the Midwest

Sales of wearable technology for fitness purposes have been increasing at this busy Apple store in an upscale shopping

district, with Jawbone leading the way.

Wearable Tech Market Potential

“Our sales have been growing, but I don’t know percentages over the past

quarter or year or anything like that. “

“We have had these in the store since they first came out.”

“The best sellers have been the Jawbone Up wristbands. Second best are

the Nike FuelBands, and the third best would be the Fitbits.”

Wearable Tech Winners and Losers

N/A

Reporter Observations: The wearable technology devices were near the rear of

this Apple store. We noted four shelves of Nike FuelBands, two shelves of

Jawbone UP 24 wristbands and one shelf of Fitbits, including five bands and two

snap-on bits. One shelf held the Mio Global heart rate monitor bands, and another, the Wahoo monitor bands. No wall

ads promoted the wearables or the Apple Watch, but the Fitbit was touted in a small brochure of tech items aimed at

college-bound students. The store was bustling with about 30 customers, but in a 20-minute period only one person—a

middle-aged man—looked at the wearable devices.

2. Dick’s Sporting Goods assistant manager, Kansas

Sales of wearable tech devices for fitness have been steady and are expected to be strong for several years as employers

encourage their staff to become more health-conscious. Apple, Garmin and Fitbit are expected to lead the way.

Wearable Tech Market Potential

“These devices have become very popular. Sales have been steady, and I would estimate they are up 25% to 30%

from a year ago and almost that much in the past three and six months. A lot of the increase is due to the addition of

some products. We did not have the Garmin Vivofit bands until about four months ago, for instance. They have sold

well, and so have the Fitbits.”

“I would estimate sales to grow by 50% in the next year, even more. It’s

harder to break it down by quarter, but the growth should be steady. Fitness

devices really sell well over the holidays as presents.”

“Fitness has the biggest future in wearable technology. This country has a

big issue with weight, and people are going after that. We have employers

getting involved, urging employees to buy these devices. You can get breaks

on health insurance rates when you monitor your condition with this

technology.”

“Large-scale adoption is really starting right now and could build for several

years before topping out.”

“You would hope that people don’t get tired of these devices and stop using

them, but I can see that happening. I can see where some people might

give up on using fitness monitors just like they stop going to the gym.”

Wearable Tech Winners and Losers

“In the long run, Fitbit, Apple and Garmin will probably the biggest winners

in this field. They have created niches over time. Word-of-mouth

The best sellers have been the

Jawbone Up wristbands.

Second best are the Nike

FuelBands, and the third best

would be the Fitbits.

Apple Store Assistant Manager

Midwest

These devices have become

very popular. Sales have been

steady, and I would estimate

they are up 25% to 30% from a

year ago and almost that much

in the past three and six

months. A lot of the increase is

due to the addition of some

products.

Dick’s Sporting Goods Assistant

Manager, Kansas

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

34

Wearable Technology

testimonials are also big for them. Garmin’s Vivofit is specific to runners and has a great interface.”

“I am not sure who will be the losers long term. It is going to be a competitive market.”

“We also sell wearable technology over in the golf department—wrist devices that keep a lot of data—but they have

not sold well. They are seen as pretty expensive by golfers.”

3. Best Buy assistant manager, Kansas

Smartwatch sales have increased steadily and are up 100% from a year ago when this store did not have many of the

devices. Samsung and Apple eventually will dominate the market.

Wearable Tech Market Potential

“I sell the smartwatches, and they have really grown in popularity. Sales are up about 20% over the past three

months, more over the past six months and 100% in the past year. We had very few of these products a year ago, so

the growth has been explosive. I don’t work in the department that sells the fitness wearable technology, but I

understand our sales there are up too, though not as much as for

smartwatches.”

“The future is going to see more growth. Sales could double in the next year.

These are being marketed more, and they are looking better.”

“The large-scale movement toward this technology is hard to predict, but I

would say it has started now and will keep growing strong for the next two

years.”

“Fashion will take a big role in the direction of wearable tech.”

“As far as I can tell, these devices are not being tossed out by people out of

boredom or whatever.”

Wearable Tech Winners and Losers

“In the long run, it’s going to be Samsung and Apple who will be the leaders.

They’ve got the money to put into it.”

“It may be hard for brands such as Pebble and Martian to compete with the

bigger players in the future. Pebble doesn’t have the health monitoring

features for the fitness market. The round face on the Martian with text

down at the bottom is not the best design.”

4. Dick’s Sporting Goods assistant manager, Southern California

Sales for the health/fitness wearables have remained flat during the last six months after a short rush for the Nike

FuelBand when it was delivered to the store in early summer. The activity trackers now are more of a fad. To gain critical

mass, more applications and simplified connectivity to cell phones are needed. Nike is in a good position to be a winner,

but Apple likely will take over the segment.

Wearable Tech Market Potential

“The Fitbit was absolutely a hot seller last Christmas. It was the best seller until we got the Nike FuelBand. We had a

mad rush for the Nike watch in summer, and then it all kind of just slowed down.

“Garmin watches do pretty well, but since Christmas and summer with Nike, sales for these are really going pretty

flat. It think what’s going on is that people buy them and then realize that they can only do so much. Then they have

to go back to their computer and analyze what they have done, and that’s it. This is why I think so many are putting

them in a drawer and forgetting about them.”

“I think of these things right now as more of a fad rather than a necessity. We have so much back stock on these

right now. I can’t see it picking up again until Christmas—and they’ll only do well if they come out with something

new.”

“Customers like the idea of seeing their workouts or their heart rates, but if they have to go home and plug into

another device to read that data, they probably get a little overwhelmed with the process.”

It may be hard for brands such

as Pebble and Martian to

compete with the bigger

players in the future. Pebble

doesn’t have the health

monitoring features for the

fitness market. The round face

on the Martian with text down

at the bottom is not the best

design.

Best Buy Assistant Manager, Kansas

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

35

Wearable Technology

“Fitness and healthcare are probably the areas that really have the ability to make the most of these kinds of

devices, but people want more applications and a closer connection right to their phones. I can see how these might

ultimately replace the phone when folks are working out or at work.”

Wearable Tech Winners and Losers

“Nike and Fitbit are kind of going head-to-head right now, but that’s probably

going to change if Apple comes out with their smartwatch. Garmin does very

well with hikers because of the GPS system.”

“People really like the Nike product because it lets you customize your

workout and preset data.”

“I don’t think Fitbit is going to be as popular going forward. I can see Nike

dominating the fitness market, and possibly Apple for the smartwatch

competition to Samsung.”

“The Polar heart monitors are great and very popular with seniors, but you

need to buy the band to go with them in order to use them. It’s possible that

they may lose some business going forward as more products have everything in one device.”

Reporter Observations: We noted no activity in the section, which was at the store’s entrance. Several of the fitness

monitors were on sale, in particular the Nike FuelBand, which was $99, a $50 discount.

5. Best Buy sales associate, Southern California

Sales for Samsung smartwatches are relatively healthy and may increase by as much as 10% to 20% during the coming

weeks as the company releases the Gear S, which has advanced phone functionality. Apple is expected to go head-to-

head with Samsung once it releases its own smartwatch. Fitness trackers such as Fitbit and Pebble are doing well, but

are not as hot as they were a year ago.

Wearable Tech Market Potential

“The Samsung watches are doing relative well but have slowed since last spring. There is a mentality out there that if

you need to have your cell phone around to get the benefit of the

smartwatches, then it’s too many extra steps.”

“Fitbit is doing well, but so is Pebble. These are more activity trackers and

tend to be purchased more as gifts rather than must-haves for daily use.”

“Medical facilities, surgeons and people who work in healthcare research

are likely going to get a lot of use out of the wearables going forward

because of their need for hands-free data collection and communication.”

“The smartwatch sector is not going to go away; it’s going to likely get

better, more refined. With Samsung’s new watch and another from LG out

today, we expect to get demand for those and will see more and more

customers looking at them more seriously than they have.”

“Google Glass is going to remain very popular with the medical sector, but how useful that will be for everyday

consumers is yet to be determined. It could be too much technology for us right now.”

Wearable Tech Winners and Losers

“If Apple comes to the market with its own watch, look out Samsung. You can’t deny the power of the brand there.”

“Samsung will remain very strong for the Android market, but right now its products are only compatible with the

Samsung line. That might have to change if they want to really compete.”

Reporter Observations: The Samsung section was busy, but no one was seriously considering the smartwatches. No

activity was taking place in the Pebble and Fitbit section, and several activity monitoring products were on sale.

Nike and Fitbit are kind of

going head-to-head right now,

but that’s probably going to

change if Apple comes out with

their smartwatch.

Dick’s Sporting Goods Assistant

Manager, Southern California

If Apple comes to the market

with its own watch, look out

Samsung. You can’t deny the

power of the brand there.

Best Buy Sales Associate, Southern

California

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

36

Wearable Technology

6. RadioShack sales associate, Southern California

Sales have been strong for the last six months for Fitbit but have been nonexistent for Garmin’s smartwatches and other

heart monitor wearables. Nike, with its popular FuelBand technology and customizable features, may lead the way in

partnering with Samsung or LG, but Apple likely will overshadow those partnerships with its “iWear” products, should they

come to market.

Wearable Tech Market Potential

“We sell quite a few of the Fitbits. People seem to really like them and know

them by the name. They come in knowing what they’re looking for and why.”

“Sales are probably about the same though over the last six months. It’s not

our largest selling product. Garmin watches are not doing well here in this

store. We usually only have one or two on the shelves.”

“Fitness tracking is popular. I don’t see it as a fad. But just like the big

numbers of people who vow every January to get a gym membership and

start working out, many people get the Fitbit and other devices and simply

stop using them.

“Six months out, we might see more applications for the smartwatches with

real cell phone use options, but in general I think the health and fitness

sectors will be the strongest areas of growth. The technology for the

smartwatches seems to be loaded with gaps between what people think

they need and what they will actually use.”

Wearable Tech Winners and Losers

“Nike and Fitbit will top the activity tracker markets. I suppose Apple would

lead the market for smartwatches, but it could see itself as a partner with

Nike in that market.”

“I don’t think the older-model fitness trackers like Pebble will be able to

hang in there. I can see them disappearing as Nike and Fitbit continue to

expand their technology.”

“Garmin’s got the GPS market pretty much down. They could see a

partnership with Apple and/or LG or Samsung.”

Reporter Observations: The section devoted to fitness wearables was very small, with Fitbit dominating the rack. Only two

Garmin watches (the same style) were for sale. We did not witness any wearable device purchases during our visit.

7. RadioShack assistant manager, Kansas

Sales of fitness-related wearable tech devices, mostly wristbands, are up year to year and quarter to quarter. Further

growth is predicted for next year as people become more health-conscious and

products become more fashionable.

Wearable Tech Market Potential

“Our sales of this technology are definitely growing. I’d say they are up 20%

in the past three months, 30% in past six months and 60% in the past year.

Summer saw a lot of sales. People wanted to get fit and look good for the

season.”

“Sales should keep increasing, especially as we get closer to the holidays

when people buy them as gifts or make New Year’s resolutions to lose

weight. I would predict a 20% growth for the next quarter, 10% to 15% over

the next six months and 40% in the next year.”

“I really think the large-scale movement of these products will come within

one or two years. People are hearing so much more about this technology,

We sell quite a few of the

Fitbits. People seem to really

like them and know them by

the name. They come in

knowing what they’re looking

for and why.

Fitness tracking is popular. I

don’t see it as a fad. But just

like the big numbers of people

who vow every January to get a

gym membership and start

working out, many people get

the Fitbit and other devices and

simply stop using them.

RadioShack Sales Associate

Southern California

I really think the large-scale

movement of these products

will come within one or two

years. People are hearing so

much more about this

technology, and you are going

to see Apple and companies

like that enter the market more

assertively.

RadioShack Assistant Manager

Kansas

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

and you are going to see Apple and companies like that enter the market more assertively.”

“The growth will be in fitness and fashion, I believe. There are so many things these devices can do to keep you in

good health that people are becoming aware of. But they also want them to look good. You can see already that they

are making bands that look more like watches and bands where you can change out the colors. The color and style

offerings appeal especially to women.”

“I have not heard that people tire of these devices and toss them aside after six months. They are usually serious

fitness people. They may upgrade, but they don’t just get rid of them.”

Wearable Tech Winners and Losers

“Plantronics and Fitbit will probably be winners in the future. They offer a lot, and they have great brand recognition.

Apple is going to keep getting bigger in this area too.”

“I don’t think Motorola can keep up or gain any market share. JBL is another one that seems likely to slip.”

“Down the road, Apple should be the biggest in sales growth. Their Apple Watch should be a big seller.”

8. Full-time mobile phone associate for Best Buy, Georgia

Sales have risen for wearables, and more people are asking about them than a year ago. The source expects sales to

continue upward, particularly as the devices become capable of integrating with cell phones. Fashion and fitness will lead

the adoption of wearables. However, large-scale adoption will take at least one to two years. Customers buying Fitbits do

so for training purposes and continue to wear them on a daily basis. The top leaders in wearable tech are Fitbit, Misfit’s

Shine and Nike. Razer Inc. will see a lot of growth once its Nabu wearable hits the market.

Wearable Tech Market Potential

“Sales for wearable technology has increased, but I can’t speak to how much. I’ve had people ask more about

wearables than I did last year.”

“Sales will go up because the devices are becoming integrated with your phone. Fitbit, Nike+ and Shine are very

popular.”

“The estimate of $50 billion is a high expectation. Large-scale adoption will

take at least one to two years, if that.”

“Leading the wearable adoption will be fashion and fitness. Gaming won’t

be because they have been done, and the market has been crushed by

Apple and Nike.”

“I’m sure there are some that stop using the devices. However, if someone

is into fitness and starts wearing a Fitbit, Nike+ or Razer, it becomes a part

of their everyday routine. Customers put it on like they would their clothes or

a watch.”

Wearable Tech Winners and Losers

“The top three will be Fitbit; Misfit, which makes Shine; and Nike.”

“LG will definitely be the loser. Their system integrates only with iPhones

and certain Androids.”

“Razer is just coming out with wearables, but they will see exponential

growth because they are already in the game business. Gamers will be able

to receive personal messages about games they are playing, who is playing, and their own Razer account.”

“Fitbit will win the supplier side they have everything in one place; we always have a good inventory in the store. Nike

would be the loser as we don’t have enough inventory in the store. Also, Garmin has one, but not a lot of people ask

about it.”

Miscellaneous

“Most are trying to expand their network and capabilities as far as keeping it all in one place. Fitbit tries to keep safe

on minimal level, whereas Samsung wants to be integrated with their phones.”

“Razer [will win]; otherwise it will be Fitbit because they have been phenomenal with most of their stuff and their

customer service is outstanding from what I hear. Razer, because they have the technology and the growth to do it.”

Sales for wearable technology

has increased. I’ve had people

ask more about wearables than

I did last year. … Sales will go

up because the devices are

becoming integrated with your

phone. Fitbit, Nike+ and Shine

are very popular.

Full-time Mobile Phone Associate

Best Buy, Georgia

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

9. Sports Authority sales associate, Georgia

Sales for wearable tech have remained steady during the past year. The source looks for sales to increase during the

holiday season and said the industry is on track with growth predictions. He expects widespread adoption to be within the

next one to two years. The health and fitness markets will lead the adoption. Nike is the overall winner in wearable tech,

but each player will see sales growth. The future is communication, with Samsung being the frontrunner.

Wearable Tech Market Potential

“Sales for wearable technology have remained the same compared to the past three to 12 months.”

“Sales will go up at the holidays. The hottest selling device right now is the Nike FuelBand.”

“The industry is on track to hit $50 billion by 2018. Large-scale adoption will take place in one to two years.”

“Health and fitness markets will lead in adoption because they already lead.”

“I can’t respond to wearable users tossing their device.”

Wearable Tech Winners and Losers

“Nike will be the winner overall in company and device.”

“I think across the board everyone will see sales growth a little here, a little there.”

“The retailers will be the winners on the supply side.”

Miscellaneous

“The future of wearable tech will be in the communication field, and Samsung is going to be the leader because they

are currently.”

4) Wearable Tech Users and Online Consumer Survey Seven Fitbit, two Pebble, one Basis (Intel) and one Jawbone user made up these 11 sources. Blueshift also provided data

from an online August survey of 1,029 consumers. Ten of 11 wearable tech users expect the market to achieve widespread

adoption in three to 10 years. Two sources quantified growth: One expects sales to be $15 billion to $25 billion in four years

while the other expects 12% to 15% growth in 2015 and double that in two years. Fitness and health-related apps and

devices are expected to drive sales. In the next three months, 34.7% of the 1,029 survey respondents said they were likely to

buy a wearable device. Excitement for Apple’s entrance into the wearable industry is high; sources expect the company to be

the industry leader. Likewise, survey respondents believe Apple’s entry into the wearables industry will hasten and promote

adoption. Samsung and Fitbit also are expected to perform well. Companies making sensor components and working to

reduce battery usage will come out ahead as well. The wearable industry is highly fragmented; sources discussed 14 different

companies in the market. Those that may face challenges include smaller firms currently leading the wearable sector such as

Pebble, Jawbone and Misfit, as well as large companies like Microsoft, Sony, Nike and HTC. Headwinds for widescale

adoption are the lack of a must-have app or device, the lack of sophisticated integration between wearables and

smartphones, unfashionable designs, poor battery life, and difficulty in setting up and consistently using the device.

KEY SILO FINDINGS Wearable Tech Market Potential

- 10 of 11 wearable fitness device users expect large-scale adoption of wearables in 3 to 10 years.

- Health, fitness and smartwatches are expected to drive sales.

Wearable Tech Winners and Losers

- Apple is expected to become a wearable market leader and to hasten adoption when it launches its Apple Watch.

- Samsung and Fitbit will remain market leaders.

- The competitive market will challenge smaller companies that currently are doing well, including Pebble, Misfit and

Jawbone. Larger companies also will be pressured in this space, including Nike, Sony, Microsoft and HTC.

Miscellaneous

- Headwinds to adoption include a lack of a must-have device or app, a limited number of apps available for fitness

bands and watches, a lack of sophisticated integration between wearables and smartphones, unfashionable

designs, poor battery life and difficulty is setting up and consistently using the device.

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

1. 20- to 25-year-old experienced wearable device user in New York City

The source had been a wearable device user for several years, but discontinued usage during a period of travel. He plans

to purchase a new wearable for fitness. He cited several barriers to changing consumers’ behavior and integrating more

seamlessly into their lives.

Wearable Tech Market Potential

“Before I was traveling, I did a lot of wearable stuff when I was in New York—mostly on Fitbit and Basis. I was mostly

kind of underwhelmed. It was useful, but it was difficult to keep up. I used it probably for about two years or so.”

“I’m not using any wearable tech except for Moves, the app. Moves is more like a journal for me. I’m not using it for

goal setting, mostly for records. It uses the GPS and pedometer on the iPhone to interpret where you were during the

day. It’s a pretty lightweight way to track data. The benefit is it doesn’t use any wearable except your phone, which is

always on you.”

“I’m definitely in the market for a wearable right now. Just last night I was looking at comparisons for the biggest

wearable tech out there. The ones I was looking at were Fitbit and Garmin. What I’m really holding out for is whether

Apple is going to put out something that’s really, really good. It’s dubious whether it’s actually going to release an

Apple Watch or not. People aren’t so sure. There’ve been some reports that it’s being pushed back.”

“For the next three months, we’ll see more apps that are appealing for people. It’ll just become something that more

people do. It’s not going to move that far, but it’s going to be more accepted for people to use wearable devices.”

“In the next year or so, we’re going to see a lot more heart rate monitors. There’s also the Basis that came out last

year with the monitor. You’ll see devices like that that are more accurate. The Basis B1 accuracy is actually pretty

low. It’s kind of coarse in terms of the time resolution. Maybe Apple will have better resolution or accuracy on the

actual heart rate data. Combining it with other goal-setting paradigms may build things that are actually kind of

motivating. You can get more sensors and more information coming in and better ways to interpret that information

and help people get more exercise or fitness into their day.”

“I see Google Glass as having arrived five years too early. Gartner is a

research company that puts out a thing called the Technology Hype Cycle.

The Hype Cycle looks at how technology is adopted and trends. Five years

ago it was virtual reality. Google is at the top of the Hype Cycle right now. It’ll

take two or three years before it becomes more successful. It is where

technology is going, but right now it’s not that useful for what it is.”

“I think the wearable market size is approaching $1 billion at the moment.

It’s going to be at the lower end of the $3 billion to $50 billion range—maybe

$15 billion in four years. There are a lot of barriers.”

“A huge barrier to wearables is change of behavior. For fitness, it’s changing

behavior so people actually exercise more. Most of the wearable tech we’re

wearing fitness-wise is really just good at recording. When I wore my Fitbit, it

challenged me for a little bit, but the company hasn’t really figured out the

hook into your life point yet, and it needs to do that so it actually becomes

viable. Other, more ostentatious wearable tech like Google Glass is starting

out pretty badly. There’s a negative reception of Google Glass now. I’m sure it’ll change. Other things such as the

Narrative [Clip] camera is a great life plug-in device. Still, social norms still need to change. People will still ask you

about something like the Narrative and if you say it’s a camera, they’ll kind of get weirded out.”

“Fitness is a leader. Fitness is key because there’s no social norms that need to be changed. It’s something you wear

for yourself. There’s no stigma against it. It shows real value in people’s lives. It’s the leader right now.”

“I don’t know what No. 2 will be. I don’t know that much wearable tech outside of fitness. The only things I can think

of are Google Glass and Narrative.”

“I bet you 80% of wearable devices are in a drawer somewhere. I know two of mine are. That’s a real issue. There’s a

cost to buying the product and a cost to using the product. The cost to using the product is just the actual behaviors

you have to incorporate, like making sure it’s charged all the time, making sure your phone is on to sync the data at

least once a day. You have to do work.”

“The Basis band was awful because the actual device is cool, but it required you to connect to a computer by USB

once a day. Now you have Garmin Vivofit, which runs on a battery for a year, and it charges via Bluetooth.”

I’m definitely in the market for

a wearable right now. What I’m

really holding out for is whether

Apple is going to put out

something that’s really, really

good. It’s dubious whether it’s

actually going to release an

Apple Watch.

Experienced Wearable Device User

New York City

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“It’s hard to tell what benefit fitness wearables are giving to people. For certain users, they’ll really find it motivating

to see how hard they’ve worked during the day. … For some people, they’ll see that they haven’t been exercising and

won’t be motivated. It’s how these uses of tech can actually influence your behavior and show value and benefit to

your life that outweigh the cost. I think for a lot of people it isn’t quite there yet.”

Wearable Tech Winners and Losers

“Fitbit for sure is a winner. It was pretty close to first mover in the field. The

technology’s solid. For fitness wearables, it’s either going to be the top or

definitely very near it.”

“If you do believe the reports that Apple is going to come out with a

wearable device or watch, I think it’s definitely going to be a leader in that. I

don’t see an Android watch being a leader. All the products that are out are

not compelling. If there’s anyone that’s able to do wearables really well, it’ll

be Apple. If it comes out with a device, I’d revise my four-year projection

from $10 to $15 billion to $20 to $25 billion.”

“Google will quite possibly be a loser for the next few years. It’s too early to

tell for the other fitness-gear wearable tech companies. Nike is showing to

be a little bit slow, even though it’s got really good software behind it. I

would even be hesitant to say that Jawbone will be a loser.”

“Wearable tech will absolutely boost Apple’s sales. I don’t think it’ll be as big as the iPhone, but it may be at least

half as a big. Wearable tech is huge. I think Apple knows how to come out with a good product that people would like

to use. I don’t see that changing.”

“Part of me could see Samsung having some growth in wearable tech if it builds something wearable that’s

compelling. It could see substantial growth. The Gear watches I’ve seen aren’t really that compelling.”

“Definitely whoever is producing the altimeter and the accelerometer will benefit. You’ll see suppliers benefit for

anything that requires new technology.”

“If you see these wearables going more into health, companies that that provide components for heart rate

screening and sensors for perspiration will benefit as well.”

Miscellaneous

“You have to think about what the real benefit is of these wearable tech devices. It is to record data? Or is it

something more? Is it going to actually influence our behavior? The issue is how we get the data and convert it from

raw data into insights, and how we can use that data to change behavior. A lot of the wearable tech is mostly

pedometers. They haven’t really been able to synthesize it to one that integrates better into your life.”

“I could see the space for a wearable tech product that integrates into your calendar and knows where you’ll be

going. It can tell you when you need to do more exercise and schedule it in.”

“You’ll find that things will become more accepted as people start using them and see they’re kind of cool. They

definitely change in different speeds in different areas. It will change organically as they show more value.”

2. Wearable device user in the San Francisco Bay Area

The source uses a wearable device largely for fitness purposes. He believes that sleep tracking and heart rate monitoring

are important features in wearables. Additionally, wearable apps in education and for pet owners could lead to larger

market growth. Google and Apple will lead the future of wearable technology.

Wearable Tech Market Potential

“My only use of wearable tech is a Basis 1 watch. I use it as a fitness product. It’s a simple daily movement tracker

for seeing how many steps I’ve taken. I’ve used it to track heart rate and sleeping throughout the day. I got it as a

calorie counter, but it’s evolved to be a little more advanced.”

“I bought the Basis for myself as a Christmas present last December. Basis has a little bit more depth to it. I would

have probably cast aside a simple step tracker after three months. Now, I have a heart rate monitor and a sleep

tracker on my wrist. I have more than most people. So I think if you’ve got that data and broader sensors, the more

things that it’s monitoring on me, probably the longer I’m going to keep that device.”

“I watch Kickstarter, so I found out about Basis through that. I’m watching a lot of products. They’re diversifying. The

products were the sort of thing where people didn’t think they were necessary at first.”

If there’s anyone that’s able to

do wearables really well, it’ll be

Apple. If it comes out with a

device, I’d revise my four-year

projection from $10 to $15

billion to $20 to $25 billion.

Experienced Wearable Device User

New York City

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

41

Wearable Technology

“In the next year or two, we’ll see things we never knew we needed but need once we have them. Maybe one might

be just a general movement thing. They say that sitting is the new smoking. Wearable tech will remind you to get up

and move.”

“I would not hesitate to believe the estimates of $3 billion or even $10 billion for market potential by 2018. Fifty-

billion dollars is a lot of devices. To reach $50 billion, we need to see a great app or really strong market penetration.

I would say in a year or two, some company is going to develop a strong app that will help the market potential.

Large-scale adoption might happen in the next three to five years.”

“It’s going to be something health-related. If you told me there’s something

you could pair to education, I could see that happening too. I wouldn’t be

surprised if parents are just as happy to buy a wearable along with a laptop

for school. If there’s another smart company that does some wearable on

pets, pet owners would buy that. If that’s something that comes through

representing these areas in the next six months, I could see a $50 billion

market cap in a year.”

Wearable Tech Winners and Losers

“The big winner in wearable tech is probably not going to be one of the big

players; the bigger companies will be more successful in the second wave.

It’s going to be a small company that does something really innovative that

the bigger players really can’t achieve.”

“I really wouldn’t bet against Apple against anything. I bet one of the big

watch makers is going to partner with Samsung or one of the big tech

companies and have some success there—just because they’re big enough

to move the whole market. They can put out enough devices in front of lots

of people.”

“Nvidia is a graphics company. Three or five years ago, everyone was asking

how to get the energy use of processors down. Nvidia went backwards and

said, ‘For zero energy, what can we get?’ and built up from there. They have

some pretty powerful hardware solutions for graphics. I think the companies

that build from zero energy upwards will be able to accomplish a lot on the supply side. There’s only so much energy

you can put. I have to charge my Basis every two days. If you could give me a battery that runs for 10 days, that

would be a major thing.”

Miscellaneous

“Apple and Google are both going to be companies the leads us to the future of wearable tech. It’s probably going to

be a company that gives us the ability to easily do things we didn’t do before but all of a sudden are high value to

us—like if a company were to come out with real-time blood sugar tracking for diabetics. How much would be too

much to charge for that?”

3. Wearable device user and technology investor in New York City, 20 to 30 years old

This source is interested in wearables for fitness and health purposes, but believes that the fashion industry may become

a significant leader in the wearable market. Additionally, the source expressed interest in seeing what Apple releases on

the Sept. 9 iPhone event. Apple and Fitbit both have potential to be the winners in the wearable tech market. Still,

wearables must transition from being a “nice-to-have” to a “must-have.”

Wearable Tech Market Potential

“I’ve tried every device in that wristband category. I have Jawbone now. I like Jawbone the best because it sort of

equally focuses on fitness and also health. The Jawbone has a thing around sleep so you can look at what quality

your sleep was without using your phone. Some other sleep analytics things require you to use your phone. Sleep

quality was actually the most important and interesting to me because I don’t actually get great sleep all the time.”

“The reason why I started using wearable devices was because we were seeing a lot more companies working on

stuff like that, from an investor perspective.”

“I still find the devices kind of lacking. For one, Jawbone requires you to charge it relatively too often. It’s nice that it

sort of syncs up wirelessly, so I have the newest version that doesn’t require you to plug it in. The battery only lasts a

Apple and Google are both

going to be companies the

leads us to the future of

wearable tech. It’s probably

going to be a company that

gives us the ability to easily do

things we didn’t do before but

all of a sudden are high value

to us—like if a company were to

come out with real-time blood

sugar tracking for diabetics.

How much would be too much

to charge for that?

Wearable Device User

San Francisco Bay Area

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

42

Wearable Technology

few days, and I often end up getting lazy and forgetting to charge it. Sometimes I’ve gone for weeks without

collecting any data and then kind of pick it back up again.”

“Everyone and their mother is waiting to see what Apple does. It’s possible that on Sept. 9, probably besides for the

iPhone 6, there’ll be their new wearable device. Apple always ends up causing a step change in either the software

or hardware. It’ll be really interesting to see what Apple’s take on the wearable form factor is and how that affects

usage. Everyone knows that Apple is probably the most creative about thinking about new form factors for things.”

“The potential for wearable stuff is going to be largely defined by whether or not Apple comes out with a device. If so,

is it a massive step change in the user experience that makes it more desirable for people. That’s kind of hard to

predict. If we assume that Apple doesn’t launch anything this year, then in terms of potential I would say I continue to

expect the same trends that always happen: the battery life increases, the devices get a little more sensitive. … Right

now wearables are basically bounded by battery capacity, sensor cost, size, weight, and availability.”

“The most interesting wearable that will ever come out is going to be one that give you more continuous information

about your health state. The limitation to that right now is sensor development. There are people out there

developing sensors that take little measures of your blood all the time, sensors that punch your nerves and see your

nervous signal.”

“There are probably going to be whole categories of fashion wearable

devices that do cool stuff visually. We’ve even met companies that have

jewelry with electronics in it. That’s not something I necessarily care about,

but it’ll be a big category too.”

“The question of market segment and widescale adoption is a multifaceted

one. You could segment it into things that people wear because it’s

fashionable, things that people wear for tracking and utilitarian purposes,

things that people wear because they’re sort of incentivized to. There are all

these different categories that will emerge that are still sort of nascent. The

vast majority of wearables are essentially trackers and smartwatches.

Those are ‘gee whiz’ type things at this sort. They haven’t found both their

killer form factor and application that really makes it different from the

phone. … All wearables right now are either dumb sensors that transit

information to your phone, or dumb screens.”

“You should expect in the next year or so that every major fashion company will start to get into the wearables of

some form. No one really knows because fashion trends involve people following other people. The other categories

of wearables—like health-related stuff—to some extent that’s a function of sensor development and better form

factors. These are all step changes.”

“Mainstream adoption is entirely a function of having more mainstream-friendly device form factors and better user

experiences like the process for charging the batteries. There are just several inputs into whether or not it ever

becomes a mainstream category that have no definition as of now. It’s entirely impossible to make a reasonable

guesstimate of this is going to be the adoption.”

“Do wearables become something that converges on ‘every person has a wearable’? If so, what are the things that

make it so that every person needs to have a wearable? What kind of wearable does every person end up having? Is

a wearable something that every person has more than one of?”

“Maybe as many subcategories get developed, people will have five wearables. These types of things are completely

undefined at this point but could mean that the market size is the number of people in the country.”

“The segment that has the most potential is fashion. … By definition, for something to be fashionable it’s not

something I wear the same thing every single day. You want to express your fashion personality by having many

things. I think that segment has the greatest potential for numbers of devices.”

“Which segment has the greatest potential for profit or revenue? Apple generates under 10% to 20% of any devices

in the category, but 60% to 80% of the profit. What will the highest value be attached to? I feel like the category is

still so undefined that I would never make a prediction by now.”

“It’s likely that it’ll be a watch or something like a watch that becomes big. A watch is something that’s on you all the

time and has a display that you look at frequently. I could very easily see that being a thing that everyone needs. I

could also very easily see it end up being relegated to a niche thing that only a few people really care about.”

“My use case is not reflective of normal people in that I use the devices to learn about them for work.”

“Jawbone is broadly recognized as the better device on the market right now. However, that doesn’t reflect any long-

term loyalty that I have to Jawbone.”

The potential for wearable stuff

is going to be largely defined by

whether or not Apple comes

out with a device. If so, is it a

massive step change in the

user experience that makes it

more desirable for people.

Wearable Device User & Technology

Investor, New York City

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

Wearable Tech Winners and Losers

“Apple will be a winner. Outside of Apple, I would guess that Fitbit is going to do really well, simply because they

seem to be owning the coercion market. Companies are telling their employees to get a Fitbit because they’ll get a

cheaper rate on their insurance. Fitbit is dominating that conversation. I think they’ll do pretty well. My guess is that

one of the forward-thinking, fashionable trendsetting fashion companies ends up coming out with something really

cool.”

“Just like every other new form factor that evolves, you’ll see a bunch of

general-purpose tech companies try to copycat it. Hardware companies like

HTC or Sony will start producing devices. Those always end up losing.

Samsung is a different company. I would say they’re probably in the best

position out of any traditional electronics companies.”

“There’s Pebble, a watch thing that is basically a repeater for your cell

phone. That function is going to change when someone comes up with a

new reason to use a wearable and form factor.”

“My guess is that wearables will end up being another category of device for

Apple. I think there’s an open question to whether wearables that Apple

produces cannibalizes existing sales to some extent.”

“Right now it’s very clearly a nice-to-have. It’s anyone’s guess as to whether

someone actually comes up with a user interface innovation, sensor

innovation, or form factor innovation that makes it a must-have.”

“There are certain components that will always benefit. If you’re a screen

supplier or microprocessor supplier, at the end of the day it could really be a big growth supplier.”

Miscellaneous

“Some of the most impactful devices will be around healthcare. That continues to be the piece that I’m most excited

about. The FDA needs to come up with a better regulatory path for these things. There’s a lot of stuff that needs to

happen aside from what’s already there.”

4. 28-year-old Los Angeles resident who owns a Pebble watch

This source would like to see better design and more third-party apps going forward, but likes the idea of receiving

notifications on the device at places where using a cell phone is not possible. He expects to purchase the Apple watch

when it comes out. The medical sector is the likeliest area for growth going forward.

Wearable Tech Market Potential

“I’ve been wearing a Pebble smartwatch for about two years, and I love it. I can access email and text notifications,

use it as a GPS. Also, I have it hooked up to my Sonos sound system in my house.”

“I don’t think [widescale adoption of wearables is] going happen in three years. Maybe 10. I think more development

needs to take place, especially for smartwatches. If consumers consider them now, they are probably thinking about

the fact that the technology is going to be changing so fast, they are better

off waiting to see how things shake out.”

“I can see a huge market for wearable technology for the medical industry

going forward. But I think the fitness market is still more of a trendy gray

area. People aren’t likely to use the devices for fitness long term right now

because they are just extra gadgets. That’s probably why so many are

bought but not used for very long.”

Wearable Tech Winners and Losers

“I’m very excited about Apple’s forthcoming watch. I would think they’ll do

very well, just like they do in other areas. Although, it could be a while before

they come out with something that consumers think they just have to have.

The winners with the watches will be the ones who can create more third-

party relationships to offer more applications. Making them more useful is

going to be key. Right now, the watches are primarily notification

transmitters.”

Right now it’s very clearly a

nice-to-have. It’s anyone’s

guess as to whether someone

actually comes up with a user

interface innovation, sensor

innovation, or form factor

innovation that makes it a

must-have.

Wearable Device User & Technology

Investor, New York City

The winners with the watches

will be the ones who can create

more third-party relationships

to offer more applications.

Making them more useful is

going to be key. Right now, the

watches are primarily

notification transmitters.

Pebble Watch Owner, Los Angeles, CA

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“I also think that Pebble stands to gain something because they have been around for a while, and people know

them. Samsung might be popular too, but they need to figure out a way to make their products more universal.”

Miscellaneous

“I can see the medical industry and the health and fitness sector serving more of a benefit overall. I don’t think

everyone gets the idea of wearing a smartwatch or a fitness monitor for everyday use, but surgeons and those in

high-tech industries probably do. They won’t be too likely to invest in the technology and then not use it, but the

watch wearer or the guy with the smart shirt might.”

5. 32-year-old Los Angeles resident who owns a Fitbit

This source is becoming bored with her Fitbit because of its limited features, and has gone from using it for running a few

times a week to using it for walking once or twice a month. She likely would not wear an Apple Watch or any other

smartwatch. Anything from Apple will do well, but in order for a real smartwatch to function effectively, it must incorporate

cell phone access.

Wearable Tech Market Potential

“I have a Fitbit and I like it, but it is pretty limited. I bought it initially for running and that worked really well for me for

about eight months. But I’m doing CrossFit now, and the gym where I go has its own app, which I downloaded to my

phone. It pretty much allows me to do everything I can do on a Fitbit, but also it allows me to set up customizable

workouts and target goals. It’s more than a heart monitor.”

“My Fitbit is just sitting on a shelf at home now. I haven’t used it in several

months.”

Wearable Tech Winners and Losers

“Anything from Apple will do well just by virtue of who they are, but I don’t

think the technology is anything I would go out and buy. I just don’t see

myself using a watch like a phone. It seems like too many layers of

technology to me. Nike’s FuelBand is pretty popular, and I can see Nike

coming out with better and better fitness monitors on the watch and apps

for your other devices. But I am not sure how big of a demand there really is

for all this technology right now on a watch. It’s just one more device people

would have to program, pay for, keep up with and I’m not really sure that it

has the power to reach critical mass like the cell phone has now.”

Miscellaneous

“No one really knows where the Google Glass and technology like it is going

to be sold or available, right? I would imagine that the big industries like healthcare are going to be able to afford it

and find meaningful, real-world applications for what they do. I can’t see consumers rushing out to buy the glasses

and walk around with them.”

6. Atlanta Fitbit user in her mid-50s

This source has worn a Fitbit for almost two years. Samsung has helped to increase the number of people wearing tech

devices, but she believes Apple will take over the market once it releases the Apple Watch. She also envisions people

wearing their cell phones in the future. Large-scale adoption of wearable tech will happen within the next 12 months or

as soon as the Apple Watch is launched. The fashion and health fields will lead adoption. She does not think people

throw away their devices but did say these devices are underutilized.

Wearable Tech Market Potential

“I currently wear a Fitbit and have been for almost two years.”

“Over the next three, six and 12 months, the release of the Samsung model has expanded the number of people

wearing technology, but I believe once Apple releases its Apple Watch [the market] will really boom.”

“I believe wearable technology will take over the cell phone industry. People will wear their phones.”

“It will be all consumable but fitness/health will take the lead.”

Anything from Apple will do well

just by virtue of who they are,

but I don’t think the technology

is anything I would go out and

buy. I just don’t see myself

using a watch like a phone. It

seems like too many layers of

technology to me.

Fitbit Owner, Los Angeles, CA

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“I do not use my device as fully as I can.”

Wearable Tech Winners and Losers

“Pebble, loser; Samsung, Apple, winners.”

“Samsung and Apple [will be leaders] as soon as they release a model that does health tracking and incorporates

phone features.”

Miscellaneous

“Keep room for improvements; people like change.”

7. Fitbit user in her mid-30s, Cartersville, GA

This source has been using her Fitbit for six months and likes the ease of use. She expects widespread adoption of

wearable tech devices in three to five years, led by use for fitness. Fitbit and Apple will be the market winners while Nike

will be the loser because of its lack of Android integration.

Wearable Tech Market Potential

“I have had mine for six months and still use and enjoy the product.”

“I use the Fitbit Flex, which I wear on my wrist. It counts my steps, mileage, etc.”

“The Fitbit is an easy and great product. I definitely think there is a lot of potential for other companies to follow in

the lead.”

“Three to five years is how long I estimate it will take for large-scale adoption.”

“The fitness market will definitely lead the way for adoption.”

Wearable Tech Winners and Losers

“Fitbit and Apple will be the wearable winners.”

Miscellaneous

“I think it is a growing market with a lot of competition.”

8. Fitbit user in her late-50s, Atlanta

This source uses her Fitbit to monitor her health and believes large-scale adoption of wearable tech is happening now.

However, manufacturers must address technology issues to maintain their growth. Although she uses her device, she

agrees with reports that users abandon their devices after six months. She does not like the hassle involved in using the

Fitbit. Market winners will be those with a strong brand following and those that can mass-produce the technology.

Startups and small enterprise will come out on bottom.

Wearable Tech Market Potential

“I use my Fitbit for health/fitness.”

“The product availability and purchase will continue to grow exponentially as

manufacturers rush to claim market share.”

“Large-scale adoption is happening now as consumer awareness grows.

However, it will only be sustained if the manufacturers address bugs and

issues with current technology.”

“Gaming and early adopters of technology followed by health/fitness

industry [will lead in the adoption].”

“I agree with the reports that the devices are usually tossed aside. It’s not

convenient to remember to sync my device to my computer and having to

log in to enter information is time-consuming. It requires a great deal of daily

commitment. A few times my device ran out of power, and I didn’t get my

results recorded.”

Wearable Tech Winners and Losers

“The wearable tech winners will be the ones with strong brand following, e.g., Nike, Apple.”

“The losers will be startups and small enterprise unless they truly have state-of-the-art, cutting-edge technology that

no one else has but everyone wants.”

Large-scale adoption is

happening now as consumer

awareness grows. However, it

will only be sustained if the

manufacturers address bugs

and issues with current

technology.

Fitbit User, Atlanta

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

“The large corporations and companies who can inexpensively manufacture their products in large volume to meet

demand will be the winners.”

9. 19-year-old Pebble user, Kansas

This source appreciated the Pebble’s convenience and multiple uses, and now wants to buy a fitness-monitoring band.

He expects no letup in the popularity of wearable tech, and said Apple and Samsung will be the major players.

Wearable Tech Market Potential

“I have the Pebble smartwatch, which I bought in May. I use it for so many things—email, texting, looking at incoming

calls; it’s an alarm, a GPS. It gives me so much information, right on my wrist. It saves me from having to dig out my

phone all the time, which is especially handy and safe if I am driving. You can even unlock a car and control your TV

with it. Now I am shopping for a Fitbit or similar device to monitor my heart rate. … I also want something that tells

me how many calories I am burning.”

“The potential for wearable technology in smartphones and for health and

other applications is very strong. The fitness craze will drive a lot of that. The

smartwatches are becoming a cool thing to have, especially since they can

do so much but look like a watch. I got the one with the steel elastic band

instead of the rubber one.”

“Fitness and the smartwatches will be the strongest markets in the years to

come, but making these products look fashionable will be important in sales

growth.”

Wearable Tech Winners and Losers

“Samsung and Apple will be the long-term winners. They will offer the top-of-

the line products and better materials. Samsung’s problem now, as I

understand, is their smartwatches are only compatible with the Samsung

phones.”

“One loser could be Misfit, the wearable health sensors. They have a lot of

competition. Same with the Pebble watch. I don’t know if it will be here very

long. You have to buy something else to do the heart rate and other fitness testing.”

10. 35-year-old Fitbit user from Kansas

This source likes the Fitbit because it makes him accountable, but will stop using it once the Apple Watch comes out. He

estimates a 15% to 25% growth rate in the wearable tech industry in the next year and 30% to 50% over the next two

years, followed by the start of a decline.

Wearable Tech Market Potential

“I have the Fitbit wristband. I use it to count my steps on the treadmill,

monitor sleep and calories burned through the day. I have had it for about

four months, but I am waiting for the Apple Watch to come out. It will do all

the things the Fitbit does but will also enable me to check texts and emails

and to download more information. Once I get that, I won’t use the Fitbit. I

bought this on Amazon. I don’t shop stores anymore.”

“What I like about the Fitbit is that it provides accountability. I travel a lot,

and when I get back to the hotel I can see what calories I have burned and

what more I have to do that day to meet my goals.”

“Sales of wearable technology will grow by 30% to 50% over the next two

years and about half that rate for next year.”

“We are in the middle of the large-scale adoption of this technology. I say

that because I am a person who doesn’t buy at the start of a trend or at the

end but right in the middle. That means Fitbit must be about halfway into its

Samsung and Apple will be the

long-term winners. They will

offer the top-of-the line

products and better materials.

Samsung’s problem now, as I

understand, is their

smartwatches are only

compatible with the Samsung

phones.

Pebble User, Kansas

We are in the middle of the

large-scale adoption of this

technology. I say that because I

am a person who doesn’t buy

at the start of a trend or at the

end but right in the middle.

That means Fitbit must be

about halfway into its growth

phase.

Fitbit User, Kansas

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

growth phase.”

“The future is probably best for the fitness market. I personally don’t think fashion is important.”

“I don’t know if people will tire of these after six months. I wouldn’t. The only reason I will not use the Fitbit is

because I will be moving up to the Apple Watch.”

Wearable Tech Winners and Losers

“I suppose Apple will lead the way in these products, but we will have to wait to see what all they do in this field.

Jawbone seems like it is growing in popularity too. A lot of my friends have those. Whoever develops an Android

device to tie to those phones will also do well.”

11. Former wearable device user in New York City

The source is a former Fitbit user who experienced a rash while using the device once summer humidity set in.

Healthcare will lead in the wearable tech adoption because of its many practical uses. A partnership between a larger

company like Google or Apple and a new, revolutionary company would boost the wearable tech market. Manufacturers

should offer the means to measure biometric data such as heart rate, interpret relevant data in a way that encourages

regular learning, and make the devices essential to daily routines.

Wearable Tech Market Potential

“Fitbit for sure is a winner. It was pretty close to first mover in the field. The technology’s solid. For fitness wearables,

it’s either going to be at the top or definitely very near it.”

“My experience with wearable tech has been relegated to the fitness world. The only device I’ve ever tried out was

the Fitbit Flex, which is the middle of the line out of its products. It’s just more of a sensor with some vibration

capabilities. I got it in last November and pretty much wore it consistently 24 hours a day through late June or early

July. I had my charger at work because it would drain during the work day. I would charge it every four or five days.

There were some slight inaccuracies because the battery would go out sometimes.”

“My motivation for using it is that I’m an avid walker and was feeling like I

kind of plateaued and didn’t really know how much I was moving anymore.”

“Fitbit attracts people who already have that fitness mindset or awareness.

Whether or not people are doing exactly what they want to be doing, they’re

at least somewhat conscious about wanting to improve.”

“I can see wearable technology gaining a lot of adoption in certain

industries, like engineers who work on oil rigs or people in the healthcare

world who are constantly having to take all these biometric information for

patients. … In terms of overall consumer behaviors and acquisition, it’ll

remain more in the exploratory world where devices will continue to

improve. There will be some uptake, but it won’t revolutionize anything in

the next 12 months. Most wearables seem like smartphones that can

measure really simple things but can’t do much more than that.”

“In terms of the $3 billion to $50 billion range, the cycles of innovation and

disruption are picking up. That’s been the research trend over the last 50 years. … Hearing that range speaks to the

fact that there’s just so much anticipation and people are waiting for that [next big] thing.”

“We’re still operating in the landscape where there are monopolies that own a certain aesthetic or narrative. It would

be hard for a smaller player to gain massive widespread adoption because companies like Apple and Google already

have that brand awareness. People are more likely to wait for the Apple Watch than for the latest Samsung

wearable.”

“It’ll be at least five years until we see really strong adoption. … Even with smartphones, from the moment it was

released, it wasn’t until 2010 or 2011 where you started to see a lot of people from various income levels and age

demographic groups really adopt the technology. Now everyone has an iPhone.”

“Healthcare will lead in wearable tech adoption given that there is so much room for innovation in the healthcare

world.”

“Reports of wearable users tossing their devices aside after six months just speaks to the overall simplicity and lack

of complete value that these devices are delivering. When I got my Fitbit, I consciously decided I didn’t want to just

buy and discard it; it is an expensive item. When I was trying to decide what to purchase, I researched and compared

Apple is a strong contender

based on their current hold in

the market. There’s a lot of

anticipation around the Apple

Watch. But, I could see

something entering the space

and creating a ripple.

Former Wearable Device User

New York City

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

the Nike FuelBand, Jawbone and Fitbit. Based off recommendations and ease of use, I picked the Fitbit. I was

looking to track my steps. When I was going through the setup process, Fitbit had a work flow process for you. As I

was going through I thought, ‘Oh cool, this can track my sleep.’ I realized that a lot of this comes down to the user

entering the data himself. I quickly tired of those minor functions that you can track. It became apparent to me just

what a simple device it was. As my routine stabilized, I got to a point where I knew how much I was walking and that I

was being more active. Then I hit the plateau where I was still wearing it but I hardly ever looked at it. I kept it on out

of curiosity.”

“Over the summer, I started getting a rash. There was a lot of humidity and sweat. Once I had that issue, I took it off.

My skin healed so I put the Fitbit back on, but my skin was still really sensitive. After that I just took it off, and now

it’s in my drawer.”

Wearable Tech Winners and Losers

“Apple is a strong contender based on their current hold in the market.

There’s a lot of anticipation around the Apple Watch. But, I could see

something entering the space and creating a ripple.”

“The losers will be any company that doesn’t play with these devices. …

People don’t really want to build for Microsoft.”

“I haven’t seen that many reports about Apple’s new watch. I don’t know the

price point or if it’ll be something like Google Glass that very few people will

have interest in buying.”

“The sensor space could really explode, especially sensors that are catching

valuable biometric data or able to read the interfaces that are construction-

related. There are so many things that are slightly automated, like on an oil rig, or some of the applications or

medical software that hospitals buy into.”

Miscellaneous

“The focus on fashion seems like part of the hype. With new devices and sensors that are created, there will be an

element of design that will be very key. What I’m most interested in is in the weight of wearing an item and the subtle

way it’s placed on my clothing or body. People in the fashion space are very much on the forefront of culture and

technology, but with this it just seems more of a gimmick.”

“It would be nice to have more data from wearables, but as it stands, there’s just so much data available to interpret.

I would maybe want to know my heart rate if I were training for a marathon. There needs to be a strong rationale for

why I’m wearing the wearable. There’s so much data we already don’t pay attention to. Part of me wonders about

whether there’s going to be a device that will be essential to my daily routine.”

“A company coming in with more of a revolutionary mindset and perspective and building upon what’s currently there

could eventually partner with larger technology players like Apple or Google in order to latch on to behaviors and

devices that people are accustomed to. I see Google and Apple definitely being on the forefront, and I see that

happening through partnership and integration.”

12. Blueshift Research’s and SurveyMonkey’s August Groundbreaking Trend Report of 1,029 U.S. consumers

Consumer adoption of wearable technology was the top new trend identified by our online survey. The rate of adoption in

this fragmented market is low, but one-third of respondents said they were likely to adopt wearables in the next three

months. We started tracking this space ahead of the possible launch of Apple’s wearable device to see if the release

would push the technology further into consumers’ lives.

Wearable technology adoption among respondents was minimal, but interest was high.

4.5% of respondents already had wearable tech devices.

37.4% of consumers were likely to adopt wearable technology in the next three months.

18% of those were slightly likely to adopt wearable technology.

51.6% of consumers ages 18 to 29 were likely to adopt wearable technology in the next three months.

42.4% of consumers 30 to 44 years old were likely to adopt wearable technology in the next three months.

Some respondents believed Apple’s pending entry into the market would boost wearable device adoption.

I see Google and Apple

definitely being on the

forefront, and I see that

happening through partnership

and integration.

Former Wearable Device User

New York City

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

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Wearable Technology

Secondary Sources

The following seven secondary sources discussed a growing wearable tech market and the types of companies that stand to

benefit from the trend. Also highlighted were Apple’s Apple Watch; Intel and Fossil Group Inc. (FOSL) teaming up; and clothing

and jewelry being the next evolution in the wearable tech industry.

Wearable Tech Market These two articles centered on expectations for the wearable tech to grow to $8.36 billion by 2018; business practices,

mobile payments, and marketers benefiting from wearable tech adoption; and fashion-forward wearables having an edge on

the competition.

Sept. 7 Forbes article

The wearable tech market is set to become a $8.36 billion industry by 2018. The technology is being adopted most often

for business practices, which has improved the ease of mobile payments at retailers and will increase the amount of data

that marketers can use. Companies that focus on these sectors will see the most success in this growing sector.

“To many users, these new devices are often categorized as fun novelties and interesting gadgets, but others see

them for what they really are: a game-changing influence with the potential to utterly disrupt the modern business

world. As such, we’ve recently launched Salesforce Wear, a development platform that can be used for creating

business apps for Android Wear, ARM, Fitbit, Pebble, Philips, and Samsung, as well as other devices.”

“[R]ecent trends indicate that giants in the wearable tech industry are now designing their products with business

applications in mind. The recent wearable tech influx in the business world was launched with the promise of

improving workplace productivity and the overall efficiency of organizations.”

“Companies in the field service industry have already seen the impact of wearable technology, with technicians

donning wearable cameras while out in the field. Wearable ‘smartglasses’ allow many of today’s leading field

companies to solve issues faster, thus saving millions. Some of the most popular wearable devices, such as those

used to look inside patients’ veins, are being implemented in other industries. Construction workers are using this

wearable technology to easily see inside piping and walls.”

“The retail world could also benefit from wearable smart tech, specifically where productivity is concerned. Wireless

headsets, wearable wrist displays, and tech lanyards all allow employees to access information on-the-go. This

means store workers can now look up the information they need without abandoning the customer or visiting a

stationary terminal. The impact on the day-to-day may seem small, but in the long run it can increase retail

productivity tremendously. One study suggests that wearable tech in the workplace can increase productivity by as

much as 8.5%, and that it increases employee satisfaction by 3.5% as well. This impact will likely continue to grow as

more wearable tech pieces are introduced to the market.”

“Smartwatches are also increasing retailers’ productivity with payment processing. PayPal is launching a new app for

the Samsung Gear 2 Smartwatch that will make it possible for consumers easily pay for products and services right

from their wristwatch. Retail employees will be able to accept PayPal payments with the press of a button.”

“And the impact of wearable smart technology isn’t limited to these few examples; in fact, in a 2013 study,

approximately a third of U.S. and U.K. adults surveyed stated that wearable technology has helped their career

development.”

“The influx of wearable devices like Google Glass and smartwatches will open up new opportunities for marketing,

including enhanced customer data collection and insights into user interaction. Smart pieces of wearable technology

allow digital marketers to more easily collect information on the buying habits and locations of consumers.”

“Marketers aren’t the only ones who will benefit from the wearable technology trend. New wearable gadgets mean

enterprises will need to develop apps for new systems, and manual workers will be needed to create entirely new

products. Smart clothing and accessories are already expanding business opportunities, and as this trend continues

to flourish into a multi-billion dollar industry, new possibilities will arise.”

“By the year 2018, the wearable technology market will be worth $8.36 billion.”

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Sept. 6 NPR article

Fashion is becoming an increasingly important role in consumers’ adoption of wearable technology as new accessories

hit the catwalk at this year’s fashion week. Companies like Intel and Fitbit are teaming up with designers and will have a

better chance of becoming a leader in the wearable tech market.

“Wearable devices are strutting down fashion week runways. NPR’s Scott Simon talks with a fashion forecaster,

Rachel Arthur, about whether the new trend will last.”

“Technology might be the next big thing to hit the runways at Fashion Week in New York—bracelets and rings that

can notify you you’ve got a phone call or track the calories you’ve burned. Industry analysts predict that nearly 20

million new so-called wearable devices will adorn customers in 2014. That’s three times as many as last year.”

“[FASHION FORECAST RACHEL] ARTHUR: That you wear, exactly. So I mean, historically we’ve kind [have] seen, over

the past couple of years, lots happening in the sports-based. And those largely have been wristbands. But it’s

become a lot more feminine in the last month or so. There’s been a huge flurry of releases from the fashion industry.

Things like necklaces, some rings, different pieces of jewelry, largely that all have these notification devices inserted

in them.”

“[HOST SCOTT] SIMON: And do they look geeky or chic?”

“ARTHUR: Depends on your opinion. (Laughter). There is a mixture. I mean, there’s definitely some new ones out

there that are working their way—it’s much further towards that chic look. I can give you an example. Opening

Ceremony has just announced one that they’re calling MICA, which is My Intelligent Communication Accessory.

That’s done with Intel. So they’ve got semiprecious gems in them and a kind of snakeskin pattern to them as well.”

“But, there’s still, you know, certainly a big geek element to them. You know, there’s technology embedded, that’s

the whole point. And I’m not 100% sure we’re entirely there, in terms of things that I think everybody would want to

wear. But they’re moving in the right direction.”

“SIMON: Have you seen a device there that you would actually pay money to buy and wear?”

“ARTHUR: So I think the price tag of things makes it a very interesting discussion. I mean, Tory Burch did a

collaboration with Fitbit. She has a bracelet that encases the device within it and there is also a necklace that does

the same thing. Now, it’s $195 for the bracelets and that’s before you’ve got the Fitbit device, which is another 99

something dollars. So you know, we’re talking about not small money here to be able to have this device. And

technology does always start out a lot higher and prices do come down, inevitably. But I do think that that’s going to

be, for the time being, a bit of a barrier.”

New/Pending Releases These two articles showed Apple unveiling its Apple Watch, and a partnership between Intel and Fossil for a fashion-forward

watch.

Sept. 9 Vox article

Apple unveiled its highly anticipated Apple Watch, which will be out in early 2015. It contains multiple functions, including

payments to merchants, directions through vibrations, and voice control. The Apple Watch needs to be linked to an

iPhone 5 or 6 and uses an inductive charging system.

“Apple unveiled its first smartwatch on Tuesday. The move was hotly anticipated, as Apple enters a competitive and

rapidly expanding market. The new watches will be available starting in early 2015, starting at $349. Here’s

everything else you need to know about the new Apple Watch.”

“There’s a reason Apple invited fashion bloggers to the event today. The Apple Watch is clearly more than just a wrist

computer that does nifty high-tech things; it’s meant to be pretty. CEO Tim Cook told the audience Tuesday that

Apple thought hard about the watch’s look, not just its capabilities.”

“Apple created an interface that allows you to use the watch without having to try to manipulate a touchscreen with

your (comparatively huge) fingers. As Tim Cook said at the event, ‘pinch-to-zoom’ wouldn’t make much sense on a

screen that’s so small. The crown on the side looks like it was meant to wind a watch’s gears, but it instead is used

to navigate: to zoom, for example, and scroll up and down. However, it is still a touchscreen, allowing you to swipe or

scroll with your fingers.”

“The Apple Watch comes in three editions: the regular Watch, Watch Edition (made from 18k gold), and Watch Sport

(made to be “light and durable”). It also has two face sizes—1.5 and 1.65 inches, according to the Verge. In addition,

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the range of strap choices allow the watch to vary in its look, from sporty to dressy. And a variety of watch faces will

also make the watch infinitely customizable.”

“As is standard with smartwatches, the Apple Watch doesn’t do much without a smartphone. And this being Apple,

the Apple Watch will only work with the iPhone. At the very least, you might not need a new iPhone to use it; it will

work with iPhone 6 but also iPhone 5 models.”

“Have you ever wanted to send your heartbeat to someone? No? Well, you can now—you can share your heartbeat as

tracked on the Apple Watch to another watch-wearer. But that’s not all. The new ‘digital touch’ system allows you to

draw small pictures to send to friends; during the presentation, Apple’s Kevin Lynch sent a drawing of a fish to a

friend to ask him if he wanted to get sushi for lunch. It also has walkie-talkie capabilities, allowing a person to

communicate with another watch-wearer. The watch also includes its own system of animated emojis.”

“Apple is billing its watch as a ‘comprehensive health and fitness device.’ Not only will it count your steps and track

your heartbeat; it counts your calories burned, how much activity you’ve done all day, even whether you’ve stood up

recently. The watch is also designed to “learn” about the wearer, suggesting fitness goals. All of this works in concert

with the fitness app on the iPhone to allow you to keep track of your longer-term fitness progress.”

“All of the Apple Pay functionality that Apple unveiled on Tuesday will be available on the Apple Watch. So instead of

tapping your phone to pay for your groceries, you could also just tap your wrist.”

“In addition to giving you text notifications and updating your fitness achievements on your iPhone, the Watch will

also perform other functions, thanks to Apple collaborations with other companies. It will show Facebook updates

and baseball scores, as well as where you left your car (assuming that car is a BMW). Starwood Hotels has also

worked with Apple to create an app that will allow the watch to unlock a hotel room door.”

“One of the features Apple touted on Tuesday is the watch’s inductive charging system. Users will be able to charge

an Apple Watch by connecting a cord magnetically to the back of the watch body. But notably absent was any

mention of how often you’ll have to juice up your watch. Battery life has been a big issue among the smartwatches

on the market.”

“Consider it the Apple Watch’s own system of Morse Code. The watch will do turn-by-turn directions, but instead of

making you listen to Siri’s voice or stare at your watch screen to know where to go, it will simply tell you by feel. One

type of vibration will let you know it’s time to turn left. Another will tell you it’s time to turn right.”

“The watch will work with Siri, the voice-controlled program already available on some iPhones. Pushing the crown

will activate Siri, allowing a user to ask about the weather or find nearby businesses.”

“In addition to all of the other high-tech functions, the watch’s timekeeping is advanced in its own right. Cook

bragged to his audience on Tuesday that the timepiece will be accurate within 50 milliseconds.”

Sept. 8 Canoe.ca article

Intel and Fossil are collaborating on a fashion-forward wearable tech watch, with integrated technology from Intel’s recent

acquisition of Basis.

“Intel, Fossil to collaborate on fashionable wearable tech.”

“The partnership will see the companies pool their resources to spot the emerging trends in wearable technology and

develop products that will appeal to the ‘fashion-oriented’ consumer.”

“As well as bags and accessories, Fossil’s range has a heavy focus on both jewelry and of course his and hers

watches, and the company is no stranger to collaborating with tech firms, or making smartwatches for that matter.”

“With all the buzz currently surrounding Android Wear devices and Apple’s first wearable technology device—

expected to make its official debut at a huge launch event on Tuesday in San Francisco—it’s easy to forget that

Microsoft launched a smartwatch and smart appliance software platform back in 2003.”

“Called SPOT (Smart Personal Objects Technology), the software was supported by a host of leading tech companies,

including Fossil, who launched a range of smartwatches that used an FM radio signal to offer on-the-wrist

notifications regarding the weather, news headlines and emails.”

“Intel is betting big on the future of wearable technology and its ability to make processors for the products. In March

it acquired Basis, which makes the Basis Band activity tracker—a device capable of monitoring heart rate, blood flow

and heat dissipation—and at the start of September announced a partnership with US fashion brand Opening

Ceremony that has already led to the creation of the MICA.”

“Part of Opening Ceremony’s Spring/Summer 2015 line and a gadget that made its catwalk debut at New York

Fashion Week, MICA is a smart bracelet for women that is equal parts jewelry and technology and which will be going

on sale, ‘for less than $1000’ at Barneys and Opening Ceremony stores before the end of 2014.”

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The Future of Wearable Tech These three articles highlighted circuit boards that are woven into clothing, Ralph Lauren’s smartshirts being used in the U.S.

Open, and MOTA launching smartjewelry.

Sept. 7 Esquire article

New circuit boards now can be woven into clothing for knitted circuits. These can create smart armor to help doctors

measure a bullet or other impact force on the body, and in athletic training or health monitoring gloves and clothing.

“Knitted circuits could be embedded in your clothes, creating smart armor that measures a bullet’s impact or sensor-

laden gloves for athletic training.”

“Computers can now knit together circuits (seriously!), potentially leading to electronic fabrics that are stretchable,

permeable, durable, and washable. The researchers behind the study suggest their work could lead to wearable

electronics for applications such as smart armor.”

“Circuit boards normally consist of electrically conductive foil laminated onto electrically insulating boards. For this

project, the scientists developed what they call fabric circuit boards, which they fabricated using computerized

knitting machines. Elastic yarns knit together with electrically conductive copper fibers coated in electrically

insulating polyurethane. The resulting fabric is just 800 microns thick, just eight times the average diameter of a

human hair.”

“To demonstrate their material’s usefulness, the researchers used it to fabricate a flexible and stretchable network

of sensors used in a bulletproof vest. This new smart armor could measure the impacts of bullets fired at it, with the

sensors performing well without any mechanical or electrical failures.”

“‘The measured data would help doctors assess the extent of injury,’ says study senior author Xiaoming Tao, a textile

engineer at Hong Kong Polytechnic University.”

“Future devices could include electronic skins or sensor-laden gloves for use in applications such as health

monitoring and sports training. The researchers are already developing fabric sensors and fabric circuit boards for

commercial use.”

“‘The company we work with is called AdvanPro Limited in Hong Kong,’ Tao says. ‘It is anticipated that products will

be made in large quantities before the end of this year.’”

Aug. 25 Gizmodo article

The U.S. Open utilized Ralph Lauren’s and OM Signal’s silver-coated thread and sensor nylon T-shirts to monitor ball boys’

biometric data. Ralph Lauren plans to unveil a full range of clothes in 2015 and views clothing as more convenient form

of wearable technology than watches and glasses.

“Later today, the first balls will be served at the U.S. Open. But this year, the ball boys retrieving all those missed

shots will be under closer scrutiny than usual: they’ll be dressed in nylon Ralph Lauren T-shirts lined with conductive

silver-coated thread and sensors, recording all of their biometric data.”

“In a venture with OM, Ralph Lauren is providing the ball boys with shirts that will monitor heart rate, breathing and

stress levels, allowing officials to keep an eye on the youngsters.”

“Indeed, the decision to equip ball boys with these shirts is a first step. Speaking to the New York Times, Lauren

explained that 2015 will see the company launch a range of clothing—including classic dress shirts as well athletic

wear—containing the smart technology of OM. While the garments don’t have price tags yet, it’s clear decision to

make wearable technology more convenient than watches and glasses.”

“Indeed, the idea of making everything you drape from your body smart is really beginning to gain traction. And we

can see why: the convenience offered by having to do nothing more than slip on a shirt before your activity is tracked

is really quite compelling. We’re just not sure if we’re ready to wear Ralph Lauren just yet.”

Sept. 2 Mashable article

MOTA recently unveiled a smartring that will sync up to smartphones to give people wearing devices updates and alerts

straight to their fingers. Smartrings could be another form of smart technology entering the market in the next year.

“While smartwatches and bracelets are finding a foothold in the wearable-tech space, another device is also starting

to heat up: smart rings.”

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“Following up on its sleek smart bracelet released in 2013, MOTA has unveiled a smart ring that takes up less space

on your body, but still promises the same kind of smartphone-notification interactivity.”

“Officially announced at Berlin’s IFA consumer-electronics show, the MOTA SmartRing is designed as a notifications

hub for your finger, delivering updates when you have new text messages, email, calendar events and incoming

calls.”

“Optimized for use with both Android and iOS devices, the smart ring can also deliver Twitter and Facebook

notifications, as shown on MOTA’s website.”

“We’ve seen ring-like devices before on crowdfunding sites, but this entry from an established manufacturer

suggests a trend toward producing smart rings in the near future.”

“However, early consumer reviews of MOTA’s first smartwatch were mixed, so it may be too early to get excited about

the smart ring’s capabilities.”

Companies Discussed

Device Manufacturers

Apple Inc. (AAPL) smartwatch

Samsung Electronics Co. Ltd. (KRX:005930)

smartwatches and fitness trackers

Nike Inc. (NKE) fitness trackers

Garmin Ltd. (GRMN) activity, fitness, GPS, golf devices

Fossil Group Inc. (FOSL) smartwatches

LG Electronics Inc. (KRX:066570) smartwatch

Microsoft Corp. (MSFT) smartwatch and fitness tracker

Motorola Solutions Inc. (MSI) smartwatches

Symbol Technologies (subsidy of Motorola Solutions)

portable bar code scanners

JBL (Harman International Industries/HAR)

Amazon.com Inc. (AMZN)

HTC Corp. (TPE:2498)

The Swatch Group Ltd. (VTX:UHR) smartwatches

Reebok (Adidas Group/ADDYY) sports and activity

impact device

Razer Inc. activity and life band

Basis (owned by Intel) fitness and sleep tracker

Narrative wearable cameras

Pebble smartwatch

Martian Watches smartwatches

ConnecteDevice smartwatch and activity tracking

Polar Electro activity, fitness and heart rate monitors

Fitbit activity and sleep trackers

Misfit Wearables activity and sleep monitors

Jawbone fitness tracker and phone headset devices

Withings activity, health and sleep devices

Xiaomi Inc. fitness and sleep tracker

Proteus Digital Health wearable and ingestible sensors

Hexoskin biometric smart shirt

Omsignal fitness tracking shirt and device

Chip, Sensor, Antenna and Connector Manufacturers

ARM Holdings PLC (ARMH)

Advanced Micro Devices Inc. (AMD)

Intel Corp. (INTC)

Smartglasses and Virtual Reality Device Makers

Google Inc. (GOOG/GOOGL) Google Glass and

Android Wear

Seiko Epson Corp. (TYO:6724)

Vuzix Corp. (VUZI)

Sony Corp. (TYO:6758)

Facebook Inc. (FB)

Canon Inc. (CAJ)

Imagination Technologies Group PLC (LON:IMG)

Kopin Corp. (KOPN)

Movidius Ltd.

Fortemedia Inc.

Daqri

Lumus

Optinvent

Meta

Recon Instruments

Atheer Labs

Laster Technologies

Glassup

APX Labs LLC

Metaio GmbH

Blippar

Smart Textiles

Michael Kors Holdings Ltd. (KORS)

Adidas AG (ADDYY)

Under Armour Inc. (UA)

Lululemon Athletica Inc. (LULU)

Burberry Group PLC (LON:BRBY)

Ralph Lauren Corp. (RL)

Clothing+ Group

Diane von Furstenberg

PureLime A/S

Shock Absorber

Kalenji

Berlei

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Texas Instruments Inc. (TXN)

Broadcom Corp. (BRCM)

Freescale Semiconductor Ltd. (FSL)

NXP Semiconductors NV (NXPI)

Qualcomm Inc. (QCOM)

Nvidia Corp. (NVDA)

InvenSense Inc. (INVN)

Bosch Ltd. (BOSCHLTD) sensor maker

Atmel Corp. (ATML)

Plantronics Inc. (PLC)

TE Connectivity Ltd. (TEL)

Amphenol Corp. (APH)

Laird PLC (LON:LRD)

Nordic Semiconductor ASA (NDCVF)

Maxim Integrated Products Inc. (MXIM)

Linear Technology Corp. (LLTC)

STMicroelectronics N.V. (STM)

Kionix Inc.

Molex (a Koch Industries company)

Sensoplex

Softkinetic

Leap Motion Inc.

Muv Interactive

Nod (by Variable Inc.)

Additional research by Carolyn Marshall, Eva Cahen, Eugenia Lee, Cindy Elsberry and Jacqueline Fox

The Author(s) of this research report certify that all of the views expressed in the report accurately reflect their personal views about any and all of the subject securities

and that no part of the Author(s) compensation was, is or will be, directly or indirectly, related to the specific recommendations or views in this report. The Author does not

own securities in any of the aforementioned companies.

OTA Financial Group LP has a membership interest in Blueshift Research LLC. OTA LLC, an SEC registered broker dealer subsidiary of OTA Financial Group LP, has both

market making and proprietary trading operations on several exchanges and alternative trading systems. The affiliated companies of the OTA Financial Group LP, including

OTA LLC, its principals, employees or clients may have an interest in the securities discussed herein, in securities of other issuers in other industries, may provide bids and

offers of the subject companies and may act as principal in connection with such transactions. Craig Gordon, the founder of Blueshift, has an investment in OTA Financial

Group LP.

© 2014 Blueshift Research LLC. All rights reserved. This transmission was produced for the exclusive use of Blueshift Research LLC, and may not be reproduced or relied

upon, in whole or in part, without Blueshift’s written consent. The information herein is not intended to be a complete analysis of every material fact in respect to any

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