When can we expect a credible services market for health and fitness wearables?

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The early-adopter, health-conscious, gadget-oriented consumer has largely defined the narrative about wearable fitness trackers until now. Brands such as Nike, Fitbit, Pebble, Sony, and Samsung have focused their marketing around device features, the look and feel, and design in creating these fitness products.

The same applies to smart watches, which are increasingly taking the role of fitness trackers, with the Apple Watch being a good example where the focus has been on how fashionable the device is or how superb the craftsmanship is.

But very few vendors have cared to explain the actual value that consumers can derive from a wearable fitness device. This is because the true value is mostly hidden in the software and services that work in the backend or cloud. The value in the services can range from extracting useful data from the device and generate actionable insights, or the other way around where the software filters relevant and contextual information and presents it to the device.

In my opinion, this has been one of the main reasons for the ongoing disenchantment with wearables fitness devices, where users have been enticed to buy these devices at first glance, used them for a short period, and then abandoned them shortly thereafter. The big question and hotly discussed issue in wearables has been – how does one increase the ‘stickiness’ for wearables?

Wearable services could be one of the answers. Fitbit has had its Fitbit Premium service since the beginning, an annual members only service, which provides a personal trainer, personalized fitness, food and sleep reports, and a peer ranking benchmarking tool. It also allows users to export their data if they want to. However, this hasn’t particularly caused a massive uptick in the sales of Fitbit devices. As per sources, the number of Fitbit premium subscribers is a very small proportion of total Fitbit devices sold. So what’s wrong?

In my opinion, $49 per year is a hefty price tag to pay especially when users are unclear about the value proposition and the benefits of getting access to additional reports and data. The pricing has to come down much further to get people interested in even considering a service model for wearables.

A much more credible services approach is a platform-based approach, Apple’s HealthKit, Samsung’s SAMI, Google’s Fit, and Microsoft’s Health are all service-oriented software platforms that are aimed at developers. It is up to the developers to build applications and services on top of the health data, which allows the marketplace to decide how to price and offer services. It’s no coincidence that all these platforms have been launched in quick succession during the second half of 2014. This suggests that there is surprising consensus in the industry around the timing and need for a services marketplace for wearables concerning health and fitness data.

This means that a BMW app could alert users when their wearable data suggests that they are too tired to drive, a Walmart app could suggest groceries based on activity and diet plan, or Google Maps could suggest a route to work that includes just the optimum amount of walking. Some of these services will be free and some might be monetized.

We can expect some of the first wearable oriented applications from developers in the 2015 timeframe, with 2016 being the year when things get really interesting as developers vie to compete with each other on the multiple platforms, which is when we might see the actual wearables revolution take off.

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