[The hype around wearables is giving way to new opportunities for developers. Wearables move from “smartphone copycats” to wearables-first applications, to data-driven powerhouses. In this post we present the recording of our webinar on developer trends in wearables, and we answer the most pressing questions from participants.]
Wearables are moving from a period of hype to a period of deeper exploration.
In a previous post, we called the Internet of Things the peace dividend of the smartphone wars, and IoT developers the baby boomers of that period. In other words, smartphone innovation made hardware technology abundant. It’s no longer the bottleneck. IoT breakthroughs will happen not by making more powerful processors or larger memories, but by identifying new applications for the sensors, devices and connectivity. This certainly seems to be the case for wearables, which arguably started with the first Fitbit in 2008 and boomed after the launch of the Pebble and Android Wear in 2013 and 2014. Those were the days of the wearables hype.
That hype has now died down. Developers in particular are getting more cautious about wearables. Between Q4 2014 and Q2 2015, the percentage of IoT developers targeting wearables dropped from 28% to 21%. Developers have not turned their back on wearables entirely – many still plan to develop for wearables in the future – but the initial enthusiasm is making way for realism, and a search for truly valuable uses for these new devices.
Towards deep exploration and mature platforms
We investigated the burgeoning space of wearable developers and platform in detail in our October 2015 report: The Wearables Landscape 2015. The report draws data from the 670+ wearable developers that participated in our 9th edition Developer Economics survey (Q2 2015). We also took a good look at the platform space for wearables, and presented a leaderboard of the 15 smartwatch platforms vying for developers’ hearts and minds.
Some of the key insights from the report include:
Wearables move from “smartphone copycats” to wearables-first applications, to data-driven powerhouses. Companies experiment with fashion, authentication, entertainment, and workplace applications.
Digital identity will be the new axis of competition for fashion brands.
The future winning developer platforms for wearables are emerging right now. These winners will be as dominant as Android and iOS are in mobile.
In smartwatch platforms, Apple Watch OS leads, while Android Wear is under pressure from new challengers.
Data apps are the next big untapped opportunity for wearable developers. Platforms are emerging for health and wellness apps, and for productivity-oriented people analytics. Data platforms will be at least as important in defining the wearables market as smartwatch platforms. Developers have yet to discover these lucrative data app opportunities.
Power shifts from West to East. Strong Chinese wearable platforms are emerging that no longer need the West for innovation, or to reach a critical mass of users. The wearable developer population of Asia is almost as big as those of North America and Europe combined.
We covered all of these insights in our webinar on the topic.
After the webinar, we received lots of questions from participants. While we didn’t have time to cover all of them during the webinar, we don’t want to withhold you our answers.
Q: Do you foresee any technology discontinuities which will drive either customer or enterprise adoption of wearables & hence market size to the next level?
A: While there are certainly interesting technologies on the horizon (I mentioned printable electronics and energy harvesting in the webinar), we look for the key market driver elsewhere. What wearables need are killer apps – use cases that are so powerful that they become almost universally desirable. The way to find a killer app is not by doing better market research, but by exploring thousands of use cases and letting the most powerful ones emerge. That’s why app platforms (both on the device and the data level) are so important, and also why it’s so important for app platforms to have the most apps.
Q: Does having an app store, like the Pebble app store or the Myo market, impact the size of the developer and app ecosystem?
A: Absolutely! App stores are the glue that connects developers and users. App stores reduce the effort it takes for users to find a suitable solution for their needs, and makes it easier for developers to get discovered. But it’s more than just convenience. Having this discovery, promotion, and sales mechanism, is a key element of starting network effects, where developers and their apps attract users to the platform, and users provide an attractive addressable market for developers. Network effects are the dominant economic driver of app platform success.
Q: Do you see data being stored on the device, centralized on the mobile, or rather sent to the cloud?
A: Engineers will presumably pick the solution that makes more sense, given the ever-evolving capabilities in bandwidth, on-device storage, battery life, connectivity, and requirement to connect the watch to a phone. Different companies will have different philosophies in this regard, e.g. Apple is more device-oriented, Google more cloud-oriented.
The more interesting question is what developers will do with that data. In a device-centric model, you’re not just limited in processing power, storage, and battery life, but also to the data coming from that device itself. The more “up” you go, the more opportunities there are to connect device data with other sources (like other devices, smartphone sensors, or internet services) and with historical user data.
Q: Do you believe there is an opportunity for testing the software for wearables? Or do wearable leaders appeal more to the Shiny Object Syndrome phenomenon and focus more on initial market appeal rather than quality?
A: To answer this question, we can look back at the history of smartphone apps. Quality was indeed not the first consideration in the early stages of the app ecosystem. Still, the user rating feature of app stores ensured that reasonably successful apps had to take care of quality. Over time, as competition increased and technology matured, testing and quality became more important. Today, we track as many as 180 app testing tools on developereconomics.com, depending on which ones you count. I would expect a similar evolution in wearables.
Q: How would you calculate the value of the longer lasting customer relationship for traditional fashion brands?
A: When fashion embeds digital technology into its products, its economics change to that of a digital company, to some extent. To calculate the value of a long-lasting customer relationship, digital metrics like customer lifetime value, churn, customer acquisition cost, etc become more and more relevant for fashion businesses. These are fundamentally different metrics than the ones fashion companies use today, and it will take time to adjust the corporate culture to valuing them properly.
Q: When it comes to those health data platforms, do you by chance have any data regarding adoption of those by health players (clinics, hospitals, etc)? There are a lot of strict regulations regarding medical data…
A: We are currently collecting data about developer adoption of health data platforms in our 10th wave Developer Economics survey, so stay tuned. It’s very early to see a lot of systematic data on these emerging platforms. There is some anecdotal evidence out there, e.g. see this article on the progress of Apple ResearchKit.
Regulation might not be as big a hurdle as it seems. Some types of data and applications are not explicitly regulated (yet). There’s a spectrum between, say, simple step tracking and data generated by the CAT scanner in your hospital. Even for the more serious medical research, the work of Apple (ResearchKit), Google (which also has research partnerships) and others prove that it can be done, with a reasonable amount of time and investment.