Wearable tech: Consumer toy or business tool?

From fashion designers to tech players like Google and Snap, companies are exploring opportunities in the wearable tech market in a bid to replicate Fitbit’s success by adding new revenue and data streams to their businesses. This will help drive wearable technology beyond the early stages of development and adoption, with Cisco forecasting the number of devices to rise from 97million in 2015 to 601 million by 2020.

However, consumers have short attention spans and, in the absence of a “killer app,” smartwatches to tech-infused t-shirts aimed at the general retail market will remain a niche area. On the enterprise side, wearable devices can enhance precision and understanding of human performance, creating a more sustainable business opportunity for device vendors. While the benefits to health, productivity and efficiency are extensive, such products expose end-users and vendors alike to increased privacy and security risks.

Consumer wearables struggling with long-term use case

Consumer wearable devices have mostly taken the form of health and fitness applications, through wristbands and smartwatches. They are generally used to track such activities as steps taken, calories burned, heart rate and the quality and duration of sleep. Through this approach, wearables have managed to find a purpose for regular consumers and a market to fill. The likes of Fitbit and Garmin have kept up momentum, posting double-digit growth of devices during 2016. However, the long-term use case is still unclear, as reports suggest that one-third of users tend to abandon these devices after fewer than six months, with up to 50% no longer using them over a longer period of time. This largely mirrors the whole fitness industry, where large numbers fail to make use of gym memberships for the full year. However, it points to the need for wearables manufacturers to build an ecosystem around their products, as well as other add-ons, to keep users engaged.

This sounds warning bells about how much further the casual consumer market can develop for wearables, particularly as ahead-of-the-curve products like Google Glass have been shelved. By contrast, in business and enterprise, wearable devices have a more determined application and USP (unique selling point), and this is where the true opportunities and risks of the technology will play out.

Exciting innovation possibilities for sports, military and industries

Sports, military and medical industries are the three sectors that stand to benefit most from developments in wearable technology over the coming years.

Company wearables could be used for health insurance tracking or medical management programs

The health and fitness applications are already well known, but these will become more accurate and have even greater capabilities. They’ll be able to tell individuals when they’re at risk of injury, deliver diet plans based on training regimes and capture psychological information. The wearables case is much clearer for companies requiring people to wear them as part of health insurance tracking, or as part medical management programs that monitor vital signs and deliver drugs to at-risk patients. We’re already seeing this start to play out with Aetna, a health insurance provider, to subsidize customers who want to buy Apple Watches, in order to help manage their medications, long-term care and insurance plans.

The most exciting opportunities are when wearables tech moves beyond monitoring and exchanging data, toward assisting humans with specific tasks. For example, connected glasses won’t just be for answering emails but also used for augmented reality tasks — for instance, in training military personnel. Wearable wristbands won’t just monitor your heart rate, but guide users’ hand movements to perform precise tasks for surgery or develop a golf swing. “Smart clothing” could even be utilized for more accurate readings than wristbands and smartwatches, with sensors that heat or cool users depending on body temperature. The U.S. Department of Defense is currently investing in combat uniforms with optical sensors that make soldiers “invisible” to enemy night-vision goggles. Tractica forecasts that enterprise and industrial use will grow by a total of 171.9 million between 2015 and 2021, increasing from 2.3 million shipped annually in 2015 to more than 66 million annual shipments in 2021.

Wearables moving beyond watches and wristbands

Tractica expects that smartwatches will emerge as the most popular wearable device, beating out wristband trackers and smartglasses in enterprise use, because they fit more seamlessly with existing lifestyles. These three device types will remain the most prominent overall, given the relative ease of installing connectivity and user familiarity. However, they are all quite noticeable and it is likely that people may prefer items that are less intrusive to their overall appearance. Less conspicuous device options are also being launched, including rings and jewelry (Ringly, Misfit Bloom) and earbuds (AirPods), plus more innovative approaches, such as wearable tattoos.

Smart clothing the fastest-growing due to stronger capabilities

“Smart clothing” and “smart fabrics” are also less intrusive alternatives and offer several advantages over other device options. The process involves combining textiles with internet of things technology woven into them. These “smart” apparel items will embed displays, circuit boards, wireless internet, batteries and biomonitors into the clothing or print them on the fabric, to the point they’re indistinguishable from the fabric itself. Like other devices, smart clothing can take on two forms: passive — which monitors and exchanges information on the wearer, and active — which reacts to changes in temperature and stores energy.

Smart clothing also has the advantage over wrist wearables in terms of monitoring, due to close connection to the skin and a greater number of contact points. In a recent study, Fitbit and similar wearables reached 80% accuracy when measuring heart rate, but accuracy decreased when the heart rate climbed. Smart clothing is nearer to 100% and maintains accuracy in different circumstances. For athletes, this simply involves wearing a shirt instead of a wristband that can interfere with performance. This explains why Gartner expects smart garments to be among the fastest growing category of wearables, while demand for smartwatches and wristbands slows.

The basics in this field are already available in some of Under Armor’s sportswear products, such as installed chips in footwear to analyze running styles and steps. Most important in this space will be partnerships between tech and fashion companies, as neither has the experience in the other’s field to develop next generation smart clothing. The partnership between Google and Levi’s is an obvious example, which saw Google’s Project Jacquard technology woven into the fabric of a Levi’s jacket that allowed users to control their phones by touching the sleeves. We expect to see more of these collaborative projects in the coming years to advance the area of smart apparel to higher stages of capabilities. One important consideration will be to ensure smart clothing is washable, given the heavy usage and likelihood that sweat and dirt could interfere with the embedded technology.

High costs limit mass adoption

In the case of smart clothing, companies will be unable to outsource manufacturing to cheaper markets

Mass adoption has been challenged by the high cost of developing and embedding wearable technology in eyewear and fabrics, which often puts the price of products beyond reach of the average consumer. Snap’s upcoming Spectacles are projected to target its young audience with prices of around $100. Arguably, they have learned from the experience of Google Glass which ran around $1,500.

Components and technology aren’t the only elements that will make these first iterations too expensive, but in the case of smart clothing, companies will be unable to outsource manufacturing to cheaper markets. This is because labor in Asia, for example, won’t have the materials or experience needed to construct these new devices. Hence, sourcing will need to be done inside the U.S. or other developed markets, adding to the upfront. This could provide some upside for U.S. manufacturing; however, since the devices are not likely to be affordable for mass adoption, the gains may be limited.

Security and privacy risk remain

Security and privacy will play a significant role, from the basics of ensuring that nothing personal is displayed on screens of clothing or watches, to the risks of storing user health data in the wearables’ cloud. Reputation risk in the case of a hack of user data against cloud software providers may be enough to potentially damage a wearables company that handles sensitive information. While some health insurance companies would benefit from their customers using wearable devices, the question of whether personal data should be given to companies is riddled with concern.

Wearables will reach a stage where predictive data will be so accurate that insurance providers will want consumers to wear them all the time

The U.S. has privacy regulations safeguarding consumers’ health data. However, it remains unclear whether or not the number of steps taken in a day or the quality of sleep counts as health data, in addition to what privacy regulations may apply to other data wearable devices collected on users’ location, who they are interacting with or even the content of their personal correspondence. While the data can provide a more accurate read of customer lifestyles enabling personalized coverage and care, consumers should be wary of privacy risks in this age where algorithms can be used to extract publicly available personal data to determine their profiles for everything from car insurance to employment prospects.

A broader debate could emerge around the issue of “opting out” from wearing these devices. Wearables will reach a stage where the data and the predictions of future behavior derived from it will be so accurate that insurance providers will want consumers wearing them all the time. Employers and insurance providers are already incentivizing use of wearables by offering discounts on premiums or bonuses to those who wear fitness trackers. The risk to consumers is that those who opt out of these schemes eventually become a minority that effectively pay higher insurance premiums, regardless of their health risks.


There is a growing distinction in wearable devices between those that monitor and exchange data on users, and those that can enhance the life or performance of a user. The devices that reveal much more intimate data on health or performance have the best long-term prospects. Although, even in well-funded sectors, such as the military, wide scale adoption is still a long way off while costs remain high. As with so many other disruptive technologies, the main risk revolves around how to safely store the abundance of data created by wearable devices and ensure it is used in a way that benefits companies and consumers equally.


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Teresa Spencer is the West Region Center of Excellence leader for Technology, Media, Telecommunications (TMT). She lends Client Advocacy and Risk Management expertise with a focus in the TMT industry. She has personally served more than 15 years as a risk manager in this sector, in addition to spending over 10 years’ experience on the broker and carrier side of the insurance industry.

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