Parks Points

Fitness and Health Market Opportunities for Wearables

by Harry Wang | Apr. 1, 2015

Today, roughly 30% of U.S. broadband households own a connected health device, which includes approximately 15 million households that have a connected fitness or wellness device, such as a fitness tracker, a weight scale, or a sports watch with heart-rate/GPS functions. Adoption rates are increasing, particularly among high-income households, where over one-third own a connected health device, and by 2016, more than 32 million U.S. consumers will actively track their personal health and fitness online or via a mobile device.

The entry of notable consumer-friendly brands such as Apple and Google will spur this growth in particular by driving consumer awareness and the emergence of new products and applications. Apple’s new Watch, which the company unveiled in September 2014 and started to take pre-orders on April 10, will crush the smart watch sales of its competitors in 2015; however, the entire smart watch industry will benefit from Apple’s entry. A complete ecosystem will form around these devices, including support, value-added services, and apps, which will create new opportunities for device makers, service providers, and health and technology companies.

Health and Fitness Market Segments for Wearables

Though the biggest market today is the fitness tracking segment, wearables also have significant use cases in the health and medical field. Wearable devices for medical use include pulse oximeters, insulin pumps, glucometers, blood pressure monitors, and ECG devices. Medical patches in development, which can track health and wellness vital signs in a more discrete and convenient manner, are also worth waiting for.

These medical devices usually take a different marketing and distribution path from fitness and wellness products, but the design trends for wearables in the medical field follow what is happening in the fitness area—they are becoming more discrete, with more user-centric designs and highly integrated functions.

Digital technology, material breakthroughs, and design innovations are all challenging conventional wisdom about product look and use cases. For instance, many medical device manufacturers are tapping into the boom of consumer-centric devices by extending their product lines from clinically focused areas to OTC use cases or by directly entering the wellness and fitness device market. These trends are also starting to blur the once distinct boundaries that separated the four market segments.

Driving Adoption: User Experience & Corporate Participation

The success of these efforts is highly dependent on positive user experiences. Initially this step requires well-designed hardware and software features to attract new users, but in the long term it also requires persistent motivation so that users will continue usage and achieve the targeted health benefits. Health consumers want to see results, they need feedback, and they believe they deserve encouragement and rewards for their efforts. People will cease use if they don’t see their desired results – and they can often be quick to abandon health applications. These elements cannot be dealt with by hardware alone but by hardware and software/services offered together.

For this reason, device manufacturers turn to their software teams and third-party app developers for highly interactive user experiences. Most connected health and fitness device makers have developed apps that work on all popular smartphone operating systems so that consumers can sync usage data, display information, and share progress with others. Some device makers have also created dedicated web portals in order to provide enhanced features beyond the device’s main capabilities.

Corporate discounts are also playing a key role in connected health device adoption. Nearly one-third of consumers owning a connected health device received a corporate discount when purchasing the device. Moreover, those receiving a corporate discount on their connected health device are more likely than others to use a health app associated with the device on a weekly basis.

Corporate discounts clearly have the potential to drive adoption of connected health devices. By exploring the opportunity for profitable partnerships between device manufacturers and health insurance providers, there is potential for all sides to gain. Assuming insurance companies can use the data consumers are willing to share through their connected devices to lower their costs (by encouraging healthy behavior and identifying costly health problems early), a partnership can yield benefits for all—higher adoption for manufacturers, cost-savings for insurance providers, and discounted connected health devices and insurance rates for consumers.

Moving the Market Forward: 2015 and Beyond

Going forward, Parks Associates expects traditional health and medical device manufacturers to press ahead on consumer-centric devices and promote in-home use of these devices for clinical or OTC use. Given the pressure to provide the best user experience, traditional medical device makers will work with startup companies to polish their product designs and learn new direct-to-consumer marketing tricks—or more directly, they will acquire startup companies as a way to enter the consumer market.

For fitness device makers, entering the health/clinical market is less appealing unless they harbor a strong ambition to converge fitness data with consumer health information. This possibility could open new business for them, but the standards in the health markets are so different that it makes such a move more difficult. As a result, as the consumer market revenue pool expands, more traditional device makers will enter the market with their own products or through acquisitions. There will be significant interest from consumer health and fitness device makers to work with traditional health and medical devices on technology collaboration and data integration.

The connected health market offers plenty of growth opportunities for both product OEMs and service providers. Device makers can use positive user experiences to drive replacement device sales, while providers can offer these new value-added services to their customers. These companies should pursue an integrated approach that blends hardware and services to maximize market gain.

Parks Associates today announced the Advisory Board and agenda topics for the second-annual Connected Health Summit: Engaging Consumers, taking place September 9-10 in San Diego, CA. The executive conference will focus on innovations in connected health technologies; the impact of new players such as Apple, Google, and Samsung; and new business models to drive consumer behavior, usage, and satisfaction.

Harry Wang

Harry Wang

Senior Director of Research

Harry Wang oversees Parks Associates’ mobility and apps research, which covers mobile/wearable devices and services, apps and APIs, and mobile commerce/marketing, payment, and connected car industries. He is also the founder and lead analyst of Parks Associates’ digital health research program since its inception in 2006. He and his team cover emerging health technologies, applications, and services in areas such as chronic/preventive care, independent living, wellness and fitness, and virtual/convenience care.

Harry has published more than 40 industry reports and white papers and presented his mobility and digital health research at numerous industry events including CES, Mobile World Congress, CTIA, Open Mobile Summit, World Health Congress, the American Telemedicine Association Annual Trade Show, and Parks Associates’ CONNECTIONS™ and Connected Health Summit conferences.

Harry earned his MS degree in marketing research from the University of Texas at Arlington. He also holds an MBA degree in finance from Texas Christian University and a BA degree in international business from Guangdong University of Foreign Studies, P.R. China.

Industry Expertise: Digital Health Products and Services, Portable and Mobile Access Platforms and Applications, Digital Imaging Products and Services

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