Growth in the wearable electronics market may be slowing, but with device shipments projected to expand—even double by 2021, according to some estimates—what does the future hold for the multi-billion dollar industry? For one, the market is no longer simply defined by smartwatches or fitness bands. Smart socks can now make you a better runner, while a smart bra “wellness coach” can discreetly check your heart rate and stress levels throughout the day.

In order to build a better product strategy, a major chemical and technology company recently came to us so they could get a more informed understanding of the changing market landscape and the technological innovations that will shape industry focus going forward. Quid did a comprehensive natural language processing analysis on the global wearable electronics market—looking at news, companies, patents, and product review datasets—to assess top narratives, trends, and innovations that are driving consumer interest and company investment.

Health and fitness applications for wearables technology are a major topic driving news coverage and social media engagement.

According to 2,705 global news articles analyzed by Quid pertaining to the future of wearable electronics, health and clinical applications for the technology captured the largest portion of the narrative (32%). Other topics gaining attention were innovations in technology (24%), and market analysis of the industry and competitors (15%).

Within the Health & Clinical cluster (light blue), the high frequency of news coverage indicates that the use of wearable electronics to monitor and detect health problems remains a major focus of the industry, including large smartwatch manufacturers and consumer packaged goods (CPG) companies. Articles highlighted by Quid reveal that Apple has been reportedly working on an Apple Watch-compatible insulin pump to monitor blood sugar levels, while Google has a dedicated life science team called Verily working on smartwatch and smart contact lens technology for medical usage. But large tech companies are not the only ones innovating in this space. Personal care company L’Oréal has created a wearable UV sensor patch to protect people against skin cancer. Users place the patch on a thumbnail, which then tracks and analyzes the data of sun exposure over time.

By analyzing data on social media engagement around wearable electronics, Quid helps users identify topics with high engagement rates and identify budding trends. Within the 807 stories specifically on health and clinical applications, Clinical Wearable (in light green) was the most frequently mentioned sub-topic, followed by Heart Rate Tracker (yellow) and Glucose Level Tracker (red). Innovations and startups within Healthtech (plum), and Workplace Wellness Programs (light blue) received the highest social engagement even though there was little media republish, which could be an indicator of future trends.

Workplace Wellness Programs is one such topic that has received low media attention relative to other topics, but widespread engagement on social media. Articles about companies that are encouraging their employees to wear wearables to measure productivity were widely shared. Closer inspection showed that according to Salesforce, 76% of companies think wearable tech has helped improve their business performance. But users also have privacy concerns. One popular story about Amazon issuing wearable wristbands to warehouse workers revealed fears about workplace surveillance.

The wearables market is dominated by new entrants focused on health, medical, and fitness applications of the technology, but companies producing smart glasses and augmented reality (AR) devices are receiving larger shares of investment.

To better understand the competitive landscape, we analyzed 653 global companies that are active in the wearable electronics market. The Quid algorithm classified the companies into five large focus areas: Health & Medical Care, Software & Applications, Hardware & Materials, Home & Family Care, and Sports & Fitness. Companies focused on health and medical care (187 total) make up the largest portion of the industry, with an additional 76 firms working specifically on sports and fitness. Firms focused on software and applications (156) and hardware (146) came a close second and third, respectively.

According to our cluster maturity scatterplot, most industry players are young—founded within the last 8 years—and focused on health, fitness, and medical use cases. Among them, AliphCom, who operates as Jawbone, received the highest investment. The company designs, develops, and distributes fitness band and fitness trackers connected to smart devices.

Another new, but less saturated area of focus is AR and smart glasses, which was one of the only fields to receive more than 1 billion dollars of total investment. Movidius, who develops and markets vision processing solutions focusing on robotics and AR/VR, received a large share of investment and was acquired by Intel in 2016.

Large tech venture capitals and big tech companies are the top investors in wearable electronics. The bar chart above shows each investors’ focus areas: Alibaba Capital and Andreessen Horowitz are largely focused on Software & Applications while Intel Capital is clearly more focused on Hardware & Materials.

While there was no dominant acquirer in the industry, Amazon, Apple, and Samsung Electronics each acquired two companies within the network. Most companies acquired by these tech giants were focused on Software & Applications and Hardware & Materials.

Available patent information indicates that tech innovations are trending toward device communication and displays and lenses, and filings are dominated by major traditional consumer electronics companies.

Quid analyzed 2,048 global patents that have been applied on wearable electronics. In a departure from our previous news and company searches, health and medical technologies did not make up the largest share of activity. Instead, most patent filings focused on Device Communications (in red) and Displays & Lenses (in light blue), both for use on wearable devices. It’s important to note that Health & Medical (dark blue) remained one of the largest and most centrally-connected focus areas.

Our analysis revealed that top patent assignees were dominated by major traditional consumer electronics companies. While patents by major chip makers such as Intel and Qualcomm had a lot of diversity, major consumer-facing electronics companies such as Samsung, LG Electronics, and Apple had clear focus areas.

For example, 75% of Samsung Electronics’ patent abstracts emphasized mobile medical apparatus or medical devices, while 89% of LG Electronics’ patent applications were about mobile terminal with device controlling functions or content transfer features—needed to connect wearable devices such as smart watches to smart phones. In contrast, Apple’s patent focus areas were more diverse: 45% on wireless communication methodologies between portable devices, followed by 11% on wireless power transmission, and 11% on switch assembly for wearables, and sporting equipment.

By looking at the distribution of patent applications over time, Quid revealed a few focus areas that had significant growth in the last 5 years. Patent applications related to Sporting Equipment (such as sensors), for example, grew from being 2.5% of all patents in 2014 to 6.8% in 2017. Similarly, those classified as Optical Lens (for image capturing, etc.) also had significant growth: from 0% of all applied patents in 2013 to 4.2% in 2017. On the other hand, patent filings related to Mobile Terminal (for devices connected to cellular phones) decreased from having the largest share—11% in 2014—to just 1% in 2017.

Our assessment of product reviews for Fitbit, a wearable fitness device, showed a growing trend of negative consumer sentiment over time and changes to concerns in the given time period.

Understanding what consumers actually think is crucial for developing product strategies. With this in mind, Quid analyzed 14,420 consumer reviews on “small black Fitbit Charge 2 fitness wristband” from September 2016 to February 2018. Both the Quid sentiment summary analysis and online star rating showed an increased rate of negative reviews on the product during the period.

Segmenting negative reviews on Fitbit Charge 2’s hardware feature helped us understand what  the complaints were and how they have changed over time. Recently, consumers have reported that—since the wristbands became switchable—the band unintentionally falls apart from the device. On the other hand, complaints on the screen protector and display once dominated negative reviews, but have decreased over time. The lead screen problem has also shifted from being about screen scratches and cracks in 2017 to a focus in the last two quarters around unresponsive screens. Negative reviews on the display have changed over time as well. In 2016, more people complained about being unable to read the small displays, but in 2017 and 2018 the primary concern was display glare and its contribution to deteriorating battery life.

In just a few minutes, Quid took an in-depth look at the wearable electronics industry to bring our client up to speed on the changing market landscape, and provide actionable intelligence on trends and innovations that will inform their product strategy going forward.

Our analysis of news, social media, and active companies revealed that health and fitness applications are driving product focus and consumer interest, though large-scale investment has trended toward AR and smart glasses technology. While market players are primarily younger startups that are saturating the health and fitness sector, our assessment of patent filings suggests that traditional consumer electronics companies such as Samsung, LG, and Apple may be leading on technological innovations. Lastly, our case study looking at Fitbit reviews over a two-year period taps into consumer sentiment and exposes technical limitations and possible opportunities for improvement.

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