Japan is Leading on Telco Wearable Services, But the West is Likely to Catch Up in 2015

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The Japanese have a tradition of being ahead of the pack when it comes to technology, and are currently the first to have not one, but two, network service providers offering wearables-driven subscription services.

Softbank began offering a Fitbit-powered healthcare service in mid-2013, with a subscription charge of ¥1058 ($9) per month. With the service, subscribers receive a subsidized Fitbit Flex device along with a 3G connected Smart Body Composition Scale measuring a number of attributes including body weight, body fat percentage, BMI, basal metabolism, visceral fat level, body age, bone level, skeletal muscle level, and moisture content. All the data is stored in the cloud and can be accessed using a mobile app or web browser.

Beginning this December, NTT DoCoMo in partnership with Runtastic has also launched a wearables service. The monthly subscription service, which costs ¥350 ($3) plus taxes, offers six separate apps for running, biking, squats, push-ups, pull-ups, and sit-ups along with a selection of 30 training programs. For now, the selection of wearable devices is limited. The service works with a C3fit IN-pulse smart shirt, which measures heart rate and transmits data to the Runtastic apps. DoCoMo expects to open up the service to more wearable devices in the future. DoCoMo already has a successful healthcare platform and apps, but it has chosen to go with an existing specialist fitness app provider like Runtastic.

Unlike most mobile operators in the West, the Japanese mobile market has had a long tradition of micro services since the i-mode days. DoCoMo has a number of add-on monthly services that it already provides as a part of its healthcare service. This includes Karada-no-Kimochi, which is a healthcare service targeted at women, and Karada-no-Tokei for biological clock adjustment, both of which are offered for approximately the same price as the fitness service. Apart from healthcare, both DoCoMo and Softbank have a number of other micro services related to smart home and smart cities. To the Japanese, the wearables services are just another offering in a long line of other innovative services.

We have not seen any North American or European telcos offer services around wearables yet. This could change in 2015. While Western subscribers aren’t as accustomed to paying for add-on services from their telco, attitudes are slowly changing. In the United States, AT&T offers a smart home subscription service focused on security and automation, which is a part of the company’s Digital Life portfolio. AT&T already offers a number of wearables including smart watches and smart fitness bands for purchase through its website and stores. The next step is for AT&T is to expand its Digital Life portfolio to offer a personalized fitness and healthcare service.

Instead of creating a generic healthcare platform, I expect Western operators to follow a branded service model similar to the Japanese operators, where they partner with a big name wearable device vendor like Misfit or Withings. This approach involves lower risk and effort, and allows the operators to get onto the personalized healthcare ladder. The telcos are already leveraging their customer billing relationships and customer storefronts to sell wearable devices. Adding a services component is the logical next step.

Also, it is extremely difficult for an AT&T (or any other Western telco) to create a platform like Apple HealthKit or Google Fit. Service providers are better positioned to add value at the higher end of the stack, utilizing their existing subscriber base as an asset to help wearable device vendors expand their market. In reality, the telco model desperately needs services like personalized healthcare to build more stickiness, as traditional services like voice and messaging become increasingly challenging businesses.

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