As we noted at this time last year, wearable tech was more than just smart watches and fitness trackers. The evidence from market forecasts and the recent Wearable Technology Show in London indicate that while the watches and trackers are still the highest selling by volume and value, the potential for wearables to become more commonplace in a lot more everyday products is still huge.
According to CCS Insight the global wearable technology market will show strong growth over the next five years, with revenue poised to reach $14 billion in 2016. The analyst firm confirms that wrist-worn devices continue to be the trailblazers in the wearables market, with fitness, activity and sports trackers accounting for almost half of all shipments in the next 12 months, at more than 60 million units; smartwatch sales are expected to exceed 30 million units.
Ben Wood, chief of research at CCS Insight, commented, “Given the rising consumer apathy toward smartphones, it is little wonder so many companies are chasing the rapidly growing opportunity presented by wearables. We’re particularly excited about the potential for augmented and virtual reality devices, and we predict 2016 will be a pivotal year.”
[Image: CCS Insight]
Furthermore, CCS Insight’s analysis confirms that China has emerged as the powerhouse for wearables. In the quantified-self segment, local player Xiaomi dominated the market with its keenly priced Mi Band and Chinese consumers’ broad love of technology has continued to drive smartwatch sales to record levels in the region.
Apple remains the biggest name in the smartwatch market, but it fell short of CCS Insight’s initial expectations of 20 million Apple Watch sales in 2015. Based on analysis of Apple’s financial results, CCS Insight estimates just over 9 million Apple Watches were sold in 2015. This gave the company a 41 percent share of the 22 million smartwatches sold in 2015.
The current momentum enjoyed by augmented reality (AR) and virtual reality (VR) is also reflected in CCS Insight’s analysis, with shipments of AR and VR headsets forecast to grow 15 times to 96 million units by 2020, at a value of $14.5 billion. The success of smartphone-based VR products in 2015 has seen sales of almost 5 million low-cost designs based on Google Cardboard, and strong shipments of Samsung’s Gear VR headset. This trend will continue into 2016, with the expected arrival of dedicated VR headsets from HTC, Oculus VR and Sony; CCS Insight predicts dedicated VR devices will record sales of nearly $1 billion by the end of 2016.
CCS Insight expects user-generated 360-degree pictures and films will be an important source of viewing material for VR headsets. This will trigger greater interest in 360-degree wearable cameras, with sales of 250,000 units expected in 2016. Sales will rise to 3.3 million in 2020, accounting for 13 percent of the entire wearable camera market of 25 million units.
Augmented reality will also continue to grab headlines over the next twelve months. The technology is playing an important role in a growing number of pilot projects as businesses start to understand its benefits. CCS Insight expects the segment to grow into a $1 billion business by 2017. In contrast to consumer-focused VR, augmented reality is predominantly an enterprise market opportunity, other than for high-end sports products such as cycling glasses.
The challenge for wearables – form factor and power consumption
However, according to venture capital firm KPCB’s Wen Hsieh, Randy Komisar, Rouz Jazayeri and Paul Yeh, there is a lot more to come in this market. “Despite the positive momentum, the expectations of the market have not yet been met, as many of these wearable devices will be found tucked away in a drawer or a nightstand after only a few weeks of use.”
They say that battery life is by far the biggest obstacle preventing broad market adoption and retention. Wearable devices should last weeks and months, not hours and days. Power consumption of key components like processors, radios, memories, and sensors are the primary culprit. Almost all of these components are hacked together from legacy mobile phone parts that were not designed for wearables, and therefore struggle to satisfy the product needs around power consumption (battery life), form factor (shape and size), and weight of the wearable.
“Unfortunately, this ultimately leads to underwhelming wearables functionality and feature set. Let’s take a moment to reflect on the Apple Watch. This is a beautiful, best-in-class product, but our belief is that power consumption and form factor played a significant role in determining the feature set. It appears that the Apple Watch did not have the power budget and the space availability for a cellular radio. This prevented the watch from operating independently as a standalone mobile device, instead of being an expensive peripheral to the iPhone.”
Virtual and augmented reality headsets also suffer from power consumption issues. These devices require high resolution displays and optics, fast CPUs, fast GPUs and numerous always-on sensors in order to deliver a meaningful user experience. Unfortunately today’s versions of these AR/VR headsets cannot encompass all of these components in small, untethered form factors, forcing most companies to build a tethered companion unit for processing and power delivery.
The next phase of wearables
KPCB says that redefining the system architecture and building-block device structures for displays, processors, memories, sensors, radios and batteries is a must. Companies like Ambiq Micro (processors), Crossbar (memories), LuxVue (displays) and Psikick (wireless) are well-positioned as key enablers for next generation wearables. [Editor’s note: these are all KPCB portfolio companies].
In order to make this next big leap, devices need to be considered not as wearables, but as pervasive devices that are integrated into every facet of our lives. Tiny in size, little to no energy consumed during operation, constantly processing, continuously mapping our environment and gathering data, and communicating device-to-devices. In order to make this world a reality, components need to be almost invisible, and can scavenge energy from kinetic movement and from surrounding power sources such as wireless signals. Batteries will rarely need to be recharged. And new ways are needed to embed electronics into plastic, wood, metals and fabric.
KPCB says that over the next ten years, we can imagine a world where instead of wearing a smartband or smartwatch to track activity and heart rate, we could just put on our favorite shirt. The buttons on that shirt would capture data from our bodies and source power from the ambient environment. These buttons would communicate to the world around us, and would never need to be recharged. Software and services would tell us when to hydrate, when to get out under the sun, when to take it easy, and when best to sleep.
That’s the pervasive computing world of the future, and when ‘wearable tech’ actually becomes an integral part of everyday living.
[Top image: Hexoskin, winner of the Editor’s award at the Wearable Technology Show, and its biometric shirt]
