Gownder was more charitable than most analysts toward the many wearable products that will be shown at CES, saying just 80% will fail, not the 90% cited by many of his peers. But in the long term, the failures really won't matter. When Internet commerce started, Pets.com and other sites failed, but many others thrived. "This is a time of great creative destruction for wearables," he said.
Part of the market dynamism behind wearable products is that companies like smartwatch maker Pebble have driven early investments through Kickstarter contributions from many smaller investors, creating a new wave of financing, Gownder noted. Plus, the fundamental components of smartwatches and other wearables, including sensors, are not that expensive. The best small startups will be bought by large companies, as Intel did with its March purchase of Basis Science, which made a health-tracking wristband.
Impact on workers and marketing apps
Businesses foresee a clear return on investment in wearables, both for operational efficiency and in helping to shape the customer experience, Gownder said. He ticked off several examples already being tested or deployed, including an unusual one by mining and construction company Thiess of Australia.
Thiess is trying out wearable devices such as the Amiigo activity tracker wristband to measure the blood oxygenation, body temperature and movement of its field workers to find out if they might have been bitten by an aggressive, venomous snake called the Inland Taipan that lives in the Australian outback. (Gownder described the application and others in this presentation, starting at 5:50 on the counter.) The company can centrally monitor such worker data in real time to provide an emergency response for an injured worker.
Smartwatches could also be a good candidate for use in mobile payments, a prospect that Apple has described with its NFC-ready Apple Watch. In the U.K., Barclaycard offers customers a bPay wristband that can be used to quickly pay for small items, such as tickets for the subway or food and drinks at soccer games of the Southampton Football Club, Gownder said.
Virgin Atlantic also evaluated smartwatches alongside Google Glass with customer service agents at its upper-class lounge at Healthrow Airport, Gownder said. Glass allowed the agents to look directly at their customers, while the smartwatches required them to look at their wrists, which led customers to feel they were being ignored.
Another intriguing marketing possibility with smartwatches are the use of haptics, those vibrations emitted by smartphones and other devices, as a means of helping direct customers through a department store or mall to reach a location for a sale or special offer. One buzz could mean to turn left, two buzzes to turn right and three to stop. Haptics could be used in similar ways inside of shoes and garments.
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