Signal, noise and Apple Watch

I'm always interesting in people making predictions, particularly after reading Nate Silver's The Signal and The Noise.

The nicest thing we can say about them is that they're always wrong. Still, we can learn a lot from their mistakes.

Currently I'm pondering the 'news' that Analysys Mason reckons 1 million smart watches will be sold in 2014. That's likely not a terrible prediction. It's a nascent market, with the Pebble still having the largest install base.

However, Analysys Mason reckons 13.6 million smart watches will be sold in 2015.

An oddly precise number, but the uplift is - of course - predicated on the news that the Apple Watch won't be released until "early 2015".

What's interesting about the prediction, however, is that to my mind it assumes that more than 85 percent of smart watches sold in 2015 will be Apple Watches.

(That's assuming growth of 100 percent for the non-Apple devices that no one cares about. Even if they sell 3 million units, Apple takes 78 percent of the market.)

In that sense, then, Analysys Mason isn't predicting the growth of the smart watch market but the growth of the Apple Watch market; a market that currently doesn't exist.

Why smart watch market share estimates remain meaningless hokum

According to market intelligence outfit Strategy Analytics, the smart watch market is exploding.

It reckons global shipments were up 250 percent year-on-year in Q1 2014 to over 700,000 units.

The key driver of this growth was Samsung, which shipped 500,000 units, taking an estimated 71 percent market share.

What tosh...

Whether the numbers are correct or not - and the fact these are units shipped not sold is a clue - it's pretty clear Samsung is not going to be the market leader on this sort of scale.

After all, back in 2013, rival market intelligence outfit Canalyst estimated that Samsung had a 54 percent market share but that was when it had shipped lots of Galaxy Gear smartphones, many of which were subsequently returned to retailers because it was a rubbish product.

But did Canalyst track those returns? Did it heck.

Of course, the more vital issue with Samsung smart watches is they only work with Samsung phones. Sure, that's a big market but it also demonstrates that Samsung doesn't get the potential of smart watches in the way that Pebble (which supports iOS and Android phone) does - and I'm not just saying that because I'm a Pebbler.

But, perhaps even more importantly, the smart watch market is so nascent at the moment that until we've had a couple of quarters of Android Wear hardware shipping (and more importantly being sold and worn by real people), there's little point even discussing market share percentages.

Still, if you have $6,999 burning a hole in your pocket, feel free to buy Strategy Analytics' no doubt awesome 6-page report. 

Amazon is getting into wearables, but how deep?

With rumours suggesting Amazon is about to launch its own phone, maybe I should start a rumour about the Amazon wearable.

After all, the company has just launched a dedicated storefront for the category.

Called the Wearable Technology store, this is an one-stop shop for trackers, smart watches, health products and wearable cameras. The store launches with FitBit and Samsung Gear as highlighted products, also including content from Gizmodo and to-be-released products like lifestyle camera Narrative. 

Yet as we've seen over the years, Amazon has launched its own e-reader, its tablet and its TV streaming box. And now the phone seems likely. 

The reason in all these cases is Amazon wants to keep its best customers within its own digital world: each device is a vertical silo whereby customers can only buy Amazon content or content that's distributed through Amazon. 

And wearables fit right into this. Wearing an Amazon tracker, the store's recommendation engine could tell you when you need to replace your running shoes (after 500 km), or the best sleeping pills to help with that annoying insomnia.  

So forget delivery drones. You'll soon be wearing Bezos on your wrist. 

Fitbit treading water for the time being

There's an interview snippet from Fitbit CEO James Park on Engadget. 

Despite being viewed at the current market leader in the nascent fitness tracker market (58%), Park plays up Fitbit's start-up status. 

"We're still a relatively small company," he says.

Fitbit Flex - my current tracker

And that's the reason it's still struggling with the Flex recall. Although only 1.6 percent of users have returned their band, citing skin irritation issues, it's being investigated, hopefully returning, this time with a global roll-out.  

As for future devices, Park says, it's "advanced sensors, tracking more about your body. This is where we're going."

Measuring the market's beating heart?

Following Canalys' market size predictions for smart watches and activity bands, rival ABI Research is back in the news.

It's now pulling numbers about the market size for heart rate monitors out of the air (surely using complex estimative algorithms? - Ed).

It reckons 12 million devices with the functionality shipped in 2013.

This seems rather high, given that few of the wearable fitness devices in 2013 could directly measure heart rate. There's the Withings Pulse and Basis B1 watch, but the main type of devices that measure heart rate are the dedicated chest straps you get from the likes of Polar and Beurer.

Personally, I'd be surprised if 12 million of those were sold in 2013 - although I bought two during the period - and anyway, they're not really devices. More like peripherals.

"The market for wearable computing devices is driven by a growing range of wireless connected wearable sports, fitness and wellbeing devices," says Jonathan Collins, principal analyst at ABI Research.

"Heart rate and activity monitors will outpace shipments of smart watches and glasses for some years to come and they will also provide the essential foundation for the development of the broader wearable market."

That said, I think heart rate (like blood pressure) is an important element of the qualified self, even if I'm not convinced that devices like the Basis B1, Adidas miCoach Smart Run watch and forthcoming Atlas band are very accurate.

Of course, Apple might change all that...

Fitbit and Samsung market leaders in fitness bands and smart watch sector, reckons Canalys

ABI Research recently licked its finger and raised it to the breeze, predicting 90 million wearable devices will be shipped in 2014.

Now rival market intelligence outfit Canalys has got more specific (if more pessimistic), suggesting 17 million wearable bands will ship in 2014. It reckons 9 million will be fitness bands like Fitbit Force, while 8 million will be smart watches like Pebble.

Shipments are predicted to rise to 23 million units in 2015; a 35 percent rise.

Looking at the current situation, Canalys has considered the market share of the key competitors in each sector. For what it calls "basic wearable bands", it gives Fitbit a 58 percent of the global market, followed by Jawbone at 21 percent.

That's probably about right as general consensus - which I agree with - is that Fitbit's devices are the best, with Jawbone, Nike and the rest struggling to catch up.

Surprisingly, however, Canalys thinks that Samsung is leading when it comes to smart watches. This is surprisingly, as though the company has spend tens of millions of marketing dollars, its Galaxy Gear watch is generally considered to be useless.

Similarly, devices from second placed Sony have not found much critical acclaim, leaving Pebble - in third place with 16 percent market share - in a stronger position than the numbers suggest.

Predicting 90 million wearable devices shipped in 2014

As demonstrated at CES 2014, wearables are *the* explosive industry sector.

Which is why the all market intelligence companies are frantically releasing their views of just how large the market can be.

The latest outfit to chance its arm is ABI Research, which reckons that 90 million wearable computing devices will be shipped in 2014.

The majority of this - it predicts - will be from healthcare and the sports and activity sectors - the latter driven by health-lite concerns about weight and obesity. ABI Research doesn't think devices such as Google Glass and smart watches like Pebble, while driving consumer interest, won't be commercially successful, however.

"The next twelve months will be a critical period for the acceptance and adoption of wearable devices," says ABI's senior analyst Joshua Flood.

"Healthcare and sports and activity trackers are rapidly becoming mass-market products. On the flipside, wearable devices like smart watches need to overcome some critical obstacles.

"Aesthetic design, more compelling use cases, battery life and lower price points are the main inhibitors."

I.e. wearable devices need to be nice to wear.

Other companies have based their view on the industry around its financial value. Back in 2013, Gartner says it would be worth $10 billion in 2016, while Juniper Research takes the view of $19 billion in 2018.

Chinese life insurance company to reward active users via wearable bracelet monitoring

A couple of weeks ago, I pondered the Chinese market for wearables, noting that one of the current big players had effectively copied Jawbone's Up bracelet.

It recently received a version 2.0 update and indeed so has Codoon's sport bracelet.

Priced at RMB 399 (around $65), it now has a LED display - more like the Nike+ Fuelband, and supports Baidu's cloud service to save data remotely.

More significantly, however, is the news that Codoon has linked up with Taikang Life Insurance to reward users who are active - as proved by the bracelet. This happens thanks to a new virtual currency, which converts into physical items.

It's an approach that I'm sure will become more popular, initially in the fast-developing Chinese fitness market, but eventually in western markets too.

[source: Technode]

Why China will be the key market for wearable computing

Given that pretty much every piece of wearable consumer electronics is made in China, it should be no surprise that Chinese companies are getting in on the act.

Of course, one element of this is copying western designs.

Although it's one of the leading wearable companies in China, Codoon's sport bracelet is "clearly inspired" by Jawbone's Up, even down to the jack-in syncing method and the sun/moon lights for active/sleep mode.

Still I love the Google Translate description on its website: "Smart bracelet fits your lifestyle, inadvertently revealing your life in the pursuit of health".

'Inadvertent revealing' is exactly what wearable computing is all about when it comes to self-monitoring.

Nation of billons

More generally, though, it will be fascinating to see how wearable computing impacts the Chinese market. There are four reasons I think the sector will be vitally important.

One, Chinese manufacturers can make and distribute such devices very cheaply.

Two, the Chinese are suffering a health timebomb, especially with respect to obesity.

Three, the Chinese health care system is going to be revolutionised over the next decade as the burden of cost shifts from individuals and families (hence the high savings rate in China) to the state. Wearable technology will be a key part of keeping costs down and better diagnosing problems.

Four, if the government decides to mandate wearables for health/cost reasons, it has the power to make it happen. Unlike in the west, personal privacy concerns will not be a barrier to widespread adoption in China.

In that context, it's also significant that Baidu - often viewed as China's Google - is heavily pushing its cloud-based backend platform for wearable device and app companies to hook into.

Let's start tracking from the beginning...

I've always viewed predictions of market sector size to be worthless.

Even those analysts who do have a good grasp of market dynamics, and who do take a robust approach to generating decent current numbers, don't have a crystal ball.

On that basis maybe they can 'predict' how the market will change over the next couple of years, but anything more longterm than two years is clearly beyond the accuracy of the currently available information.

That means even the best analysts are guessing. And that's why the only reason predictions of market sector size are interesting is in retrospect - basically to see how wrong our assumptions were.

On that basis, according to the BBC, these are some of the market predictions for the future size of the wearable technology market.

Juniper Research: $1.4 billion in 2013. $19 billion in 2018.

Gartner: $10 billion in 2016.

Credit Suisse: $50 billion in 2018.

As for my view, I think it depends on whether wearable technology remains a consumer market - mainly for sports fans who want to track their performance - or whether it breaks out hard into general medical practice.

In the case of the latter, $50 billion is the ballpark by 2018. In the case of the former, it's $10 billion.