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Credit Suisse IT Hardware Analyst Kulbinder Garcha predicts that the market for wearable technology will increase tenfold to as much as 50 billion US dollars over the next three to five years. Google Glass, the anticipated Apple smart watch and popular wristbands that track athletic activity show that consumers are already intrigued by wearable devices. But the technology's true potential lies in its ability to gather streams of currently uncollected data about a subject most of us are happy to explore in great depth: ourselves.
Evolution of Big Data
"Wearables could provide the backbone for the next evolution of big data analytics from unstructured data (that isn't packaged neatly into databases) to uncaptured data (that isn't collected at all)," a team of Credit Suisse analysts, including Garcha, wrote in a recent note, "The Next Big Thing: Wearables Are in Fashion." Wearable technology, they argue, will not only be able to track where users are, but also what they are doing, providing "a deeper understanding of how we interact with our surroundings." Think about a headset that automatically opens up your password-protected laptop when you approach ─ or shuts it off when you leave for lunch. Or a sensor that alerts your doctor if your heartbeat goes out of whack.
Impending Wearable Revolution?
While Google Glass has received a significant amount of media coverage, neither it nor many other wearable technology devices have gone mainstream, as the iPhone did when it kicked off the smartphone revolution. Athletic bands that track fitness activity, which have proved popular already, are a notable exception. But the likelihood of a breakthrough product is as high as it's ever been ─ due, in part, to that very proliferation of smartphones and tablets. Not only are consumers clearly willing to trade heavy-duty computing power for a mobile device that costs less than 500 US dollars, Garcha said, but smartphones and tablets also provide an easy place to dump the data that wearable devices will collect. That's important, because even though battery life continues to improve, consumers will still want to charge their smart watches and glasses as infrequently as possible. And crunching the numbers offline saves battery life. "A lot of the actual processing power will be done by your smartphone or tablet," Garcha said. "Your wearable devices will wirelessly communicate with them, and everything will then be backed up into the cloud."
Existing Market for Health Devices
There are endless potential uses for the data wearable devices will be able to collect about users' activities, but Garcha thinks the most likely near-term opportunities will be for corporate marketers and in creating medical and athletic applications that allow people to easily monitor their health. Using Big Data to target consumers and mobile applications are both hot topics in marketing right now, and the existing athletic trackers and wearable medical devices have established a market for health uses.
The possibilities are literally endless. Say the sensors in your smart sneakers detect that you've nearly worn them out. What if the sneaker brand could send you a coupon the next time you walk by a shoe store? The example is a hypothetical one at this point, but it illustrates the power wearable technologies could hold for corporate marketers. "If you're in a specific place and looking for something, a company could utilize that data to create a much more inventive marketing strategy," Garcha explained. Existing smart phone apps offer hints about future possibilities, according to Garcha. Monocle, an existing service from Yelp, allows users to point their phones at the street and watch as the app fills in the location of nearby restaurants, along with user reviews. But wearable tech, which could passively gather data as a consumer moves ─ without requiring them to do anything, so long as they opt in in the first place ─ could provide even more granular information.
Still in its Early Days
In essence, instead of consumers encountering marketing information serendipitously, they could instead be willingly providing information that allows marketers to find them. Michael Becker, a managing director at the Mobile Marketing Association, a New York-based industry group, said marketers could ultimately target individual users based on real-time movements and preferences, rather than simply broadcasting messages to the general public or targeting broad demographic categories such as single women under 35. "Depending on the type of wearable tech, the question becomes: Is the consumer looking through a lens out into the world, or is the world looking through a lens at the consumer?" Becker asked. Still, for all the potential, Becker noted, wearable technology is still in its early days, and there are more questions than practical answers about how to effectively harness it. For one thing, brands need to figure out how to make applications enticing enough that consumers share data voluntarily, according to Nigel Beighton, vice-president of technology at Rackspace, a cloud computing company that published a consumer attitudes survey on wearable technology this month.
Privacy and Regulatory Concerns
Making sense of the enormous volumes of information wearable devices will gather also poses a formidable technical challenge for marketers, Becker added. Privacy is a major concern, too, and the legal and regulatory framework for wearable devices is far from settled. And there is evidence that consumers are already nervous about passive data collection. In the Rackspace survey, for example, more than half of respondents said privacy concerns might keep them from using wearable technology. One-fifth said items like Google Glass should be banned outright, while nearly two-thirds said they should be regulated.
Medical and Athletic Devices
Still, consumers are already lining up to allow new devices to track the data their own bodies generate, and athletic companies are cashing in. According to Credit Suisse, Nike has sold between 1-2 million FuelBands, which monitor users' daily activity and tally the calories they burn. The bank's analysts note that athletic companies see the gear primarily as a way to build their brands, but also point out that the devices could eventually take market share from the existing 56 billion US dollar watch market. Smart watches could make a particularly attractive alternative to fashion watches that cost less than 500 US dollars, one of the fastest-growing portions of the global watch market. After all, people will only wear so many items on their wrist, and smartwatches carry a caché and functionality that existing watches do not.
Companies such as NuMetrex and Nike have created smart shirts and shoes to measure activity, but none have gone mainstream. Apple has filed some interesting patents, including one for those sensors that might track when shoe soles are wearing thin, according to Credit Suisse. Beighton, of Rackspace, believes that ultimately, all clothing will be "smart." Manufacturers might be able to decipher how often people wore a piece of clothing before it became threadbare, perhaps improving their materials or methods. But there are more serious applications, too. "There are already pants in existence that will look for sugar levels in urine, and while it may sound somewhat distasteful, you're talking about spotting diabetics," Beighton told Credit Suisse. "There are practical aspects to tech-enabling your clothing."
Numerous wearable devices already allow users to track their blood pressure and heart rate, but Credit Suisse's Garcha said the data-capturing aspect of wearable tech has the potential to make that tracking more meaningful than a mere workout tracker, such as helping patients and doctors keep tabs on chronic conditions and even catching early indicators of heritable illnesses. "If you know a person has a family history of heart disease, for example, you might want to monitor the data to see if there is something developing that you could prevent," stated Garcha. Preventice, a developer of mobile health applications, has created the BodyGuardian Remote Monitoring System with the Mayo Clinic. A small sensor attached to a patient's body records ECG data, heart rate, activity and breathing, allowing doctors to monitor patients with non-life-threatening cardiac arrhythmias. The device wirelessly transmits data to a cloud-based portal that physicians can either check regularly or set up to receive alerts when readings change significantly.
Monitoring Human Behavior
A concept gaining traction in the car insurance industry hints at another potential healthcare application, according to Credit Suisse. Progressive's Snapshot Discount uses a tracker in policyholders' cars to record driving behavior. Consequently, drivers who slam on the brakes too often may end up paying higher rates than their steady-footed counterparts. That's not wearable tech, of course, but this could be: Insurance companies that could reliably track policyholders' exercise routines and eating habits might ultimately offer better rates to customers who were actively trying to improve their own health. Naturally, verifying the identity of the user would be crucial for the success of such a technology, but who among us wouldn't consider wearing a piece of technology that lets our insurer know that they should be charging us less, not more? In the end, no matter what specific uses inventors dream up for wearable technology, their true promise lies in its unique capacity to travel along unobtrusively for the ride, silently taking notes on a user's actions and movements. What that information will reveal is anybody's guess. "The unintended consequences of yet-to-be-envisioned opportunities are perhaps even more exciting than the tangible, easy-to-define opportunities," the Credit Suisse research note said.