In early January in Las Vegas, over 170,000 tech nerds and nerd-wannabees from all over the globe descended on Las Vegas for the International Consumer Electronics Show (CES). Not surprisingly, one of the star gadgets this year was: Fitness wearables.
The industry is abuzz about everything from workout gear that can measure your hydration and fluid output to helping you maintain proper energy and productivity levels. What’s even more interesting is that many of these companies are building products and equipment that are not just for the elite athletes.
“The convergence of sports, fitness and tech or electronics is here and not just something that we saw on the horizon a very short time ago,” said Tom Cove, CEO of the SFIA, which held its inaugural Sports Tech Conference and Marketplace as part of the show. “It is here and we are just seeing the beginning.”
Smart watches and activity monitors were front and center at the Sands Expo hall. Brands like FiBbit, Withings and Garmin were showing their newest activity monitors that combine their various exercise and fitness apps together with many of the features that are being associated with the growing smartwatch category. Traditional brands like Adidas and Under Armour announced specific initiatives designed to take advantage of the latest fitness software platforms along with the newest in wearable innovation.
“All you have to do is blink and this category is changing and growing,” said Neil Schwartz, VP of market insights for SportsOneSource. “Everywhere you turned at the show, wearable technology is the new buzzword for 2015. From an exercise, fitness and training standpoint, these devices are easier to use and provide the user with an unprecedented level of data to help the user gain total control of their fitness, weight loss and training goals. 'You can’t monitor what you can’t measure’ and these devices bring it all together.”
The Sports Tech Conference, held on the second day of the show, featured SFIA members’ Adidas, MC10 and Under Armour. Simon Drabble, Adidas’ director of product creation, and Darcy Norman, EXOS director of performance innovation, discussed how technology is being used in team settings, most notably in helping the German National Soccer Team win the 2014 World Cup.
Elyse Winer, MC10’s senior marketing & communications manager, led a panel on how technology can improve an athlete’s safety while optimizing performance. Isaiah Kacyvenski, head of sports and fitness for MC10, Paul Robbins, director of elite performance for Stats, LLC, and Jeb Terry, former NFL player and CEO, StraightCast Media, were the featured panelists.
Under Armour’s Director of Performance Paul Winsper dove deep into the data currently being collected by technology and how it can be translated to help athletes develop and perform at a high level. Winsper also gave attendees an inside look on how the UA Record app, connected to its new health-tracking software, was developed.
TECH AND SPORTS MERGE
Several sports industry execs attending CES were closely watching tech’s convergence with the sports world.
“Sporting goods companies should all be represented at CES,” said Art Chou
principal, Chou Sports Initiatives. “Interacting with electronics and digital technology is a huge part of everyday life for our consumers. Even if you are not selling a ‘digital’ product or service you need to be here to better understand where your consumer's living experience is going in order to figure out where your products or service fit in with their future.”
Brian Anderson, CEO, Moji, the popular massage and recovery brand, noted that only three years ago at CES, only a few companies pitching were fitness trackers from 10×10 booths. He noted, “Now there are dozens upon dozens of companies offering fitness and activity trackers, of all shapes and sizes, which connect to robust apps and ecosystems. The wearables market has changed dramatically in just a few short years.”
Brian Enge, president at SKLZ, the maker of sports-specific training equipment, was generally impressed by CES as a whole, particularly with innovation around 3D printing and connected homes. Still, he was surprised by the lack of sport-specific companies. Said Enge, “There was a solid sampling of health or fitness applications but there were really only two companies focused on wearable sports technology. After spending time in the sports and fitness section my takeaway is that we are still in the first inning of this ball game.”
At the show, Under Armour unveiled their new “UA Record” fitness platform that brings together, hardware, software and social media. Pairing with a bevy of wearable devices. UA Record’s dashboard allows the fitness-obsessed to interact with others by sharing results and posting photos and videos.
“It's a social network for activity,” stated Robin Thurston, UA's SVP of Connected Fitness, which includes MayMyFitness. In support of this initiative, Under Armour also announced a new collaboration with HTC to bring cutting-edge technology to athletes. The mobile company will design a series of products to work in conjunction with Under Armour's fitness apps and website.
According to Thurston, “HTC is renowned for its fearless commitment to innovation, coupled with an attention to detail and premium design that makes it the ideal partner for Under Armour and UA Record. By applying these shared values to our collaboration, we will allow athletes everywhere to take their performance to the next level in a more connected and intuitive way than ever before.”
During a presentation at CES, Adidas revealed its new collaboration with Interactive Health Technologies (IHT), which pioneered a heart rate monitoring system and customized curriculums in middle schools and high schools throughout the U.S. During the 2014 school year, 240,000 children have been connected to the IHT system and they are now on track to have a daily interaction with over one million students a day by 2016.
In the partnership, Adidas will bring its miCoach-supported expertise in the area of performance and heart rate monitoring, alongside a monthly challenge program including a summer institute for PE teachers that will allow IHT to bring heart rate technology to more students more efficiently than ever before.
“We found our goals to be aligned with those of IHT and feel that the collaboration represents a fantastic opportunity to help thousands of school children achieve this,” said Stacey Burr, VP and general manager Adidas Digital Sports. “
Garmin was showing off their latest product entry into the fitness and exercise category that combines Garmin’s experience in GPS and mapping technology together with the most innovative exercise and fitness platform.
This Garmin Epix employs a touchscreen (as well as regular buttons) to allow the user to navigate on full-color downloadable maps as well as Connect IQ apps. But more importantly to active outdoor enthusiasts, it’s a fully functional GPS sport watch containing every single feature of the FR920XT and just announced Fenix3 watches.
Said Dan Bartel, Garmin VP of worldwide sales, “We’re excited to kick things up a notch with Epix by adding preloaded mapping and extra storage to an extremely rugged watch that can handle the most rigorous conditions.”
There were also many upstarts and newcomers entering this market that is projected by many to triple in the next three years.
Epson, mostly known for its printers, introduced its M-Tracer golf swing analyzer, which brings the latest in accelerometer technology together with Bluetooth connectivity.
“With its high-resolution sensors, the M-Tracer gives golfers a complete swing breakdown, providing specific, actionable information at an incredible level of detail,” said Randy Bergstedt, manager, Epson Active.
The development of the new Bluetooth standards have also sprung up a whole new category of headphones that are wireless and designed specifically for exercise and fitness.
The Consumer Electronics Association (CEA) led the show by releasing a report projecting that health and fitness devices would lead unit sales among all wearables in 2015 with a projected 20 million units. Revenues are expected to surpass $1.8 billion in 2015, according to the U.S. Consumer Electronics Sales and Forecasts, its semi-annual industry report.
Overall, wearable unit sales including smartwatches and smart eyewear as well as health and fitness devices – are projected to will reach 30.9 million units (a 61 percent increase from last year) and generate $5.1 billion in revenue in 2015 (a 133 percent increase). Smartwatches are expected to take off in 2015, selling 10.8 million units (a 359 percent increase) and earning a projected $3.1 billion in revenue (a 474 percent increase over 2014).
FITNESS WEARABLES: NICHE OR MASS OPPORTUNITY?
Still, many market watchers are still wondering whether the fitness wearable category is a small opportunity aimed at the hardcore athlete or a much larger one reaching the masses.
An admitted-devotee of the Strava social fitness app, Kenji Haroutunian, the founder of KenjiConsults and the former director for the Outdoor Retailer Show, is a believer. He sees a clear connection in Germany’s 2014 World Cup win and the superior training technology through wearables the team employed.
“At CES, I was somewhat surprised to see several brands and many individuals from the active outdoors industry there (in a city with five times more people than the biggest OR show),” said Haroutunian. “Wearable technology has been around OR for a long time (Suunto, for example). But the technology for staying found, staying safe, training right, and staying powered are bringing real value to the average Joe outdoor athlete (me) as well as the elite individuals and training teams.”
Haroutunian also noted how already smaller/more powerful chips and more flexible platforms (i.e., the curved TVs omnipresent at CES 2015) are changing how useful and powerful wearables will be in outdoors and sports. Haroutunian added, “There were more options in stylish tech jewelry and eyewear (less goofy, more affordable than Google Glass), hi-res wireless audio and video, and many fitness trackers and metrics monitoring wearables.”
Chou was floored by the amount and quality of data already available for athletes, including health data that used to require a visit to the doctor being available in real-time.
“The marketer in me wants to rush home and trademark the term ‘personal dashboard’ because you will soon be able to monitor your key body metrics the same way your car constantly monitors MPH, RPMs, and oil pressure,” said Chou.
Chou believes that while such data may seem applicable to only the serious athlete, the average person will eventually find ways to utilize the data as the technologies become more ubiquitous. He added, “Remember, supplements like electrolyte drinks and protein powders were initially championed by elite athletes; as they became more widely available (and easier to appreciate) they became more mainstream.”
Moji’s Anderson believes that while elite athletes were some of the early adopters of wearables, the huge volume he’s seen lately being sold from some fitness trackers shows that it’s a category already being driven by the “Average Joe and Average Jane.”
“These companies are finding great success getting everyday consumers to wear their devices, track their personal activity and upload that data via Bluetooth to slick apps which keep the consumer interested and motivated,” said Anderson. “The mass nature of this market can be exhibited by the recent TV ad campaign launched by FitBit. A few years ago, who would ever have thought that a fitness tracker brand, without the resources of Nike or Adidas behind them, could afford a national TV campaign?”
SKLZ’s Enge is still concerned by surveys showing most users aren't staying highly engaged with their wearables over long periods of time.
“I do, however, believe strongly in the long term opportunity of using wearable technology to provide key insights to help both elite athletes and every day athletes improve and prepare for their sport,” said Enge. “It's proven that the data acquired from wearables is assisting coaches and performance trainers as they prepare their teams. What hasn't been proven is how engaged individual athletes are with the technology.”
He notes that a product hasn’t taken off that’s “truly made for athletes,” with most of the successful products in the marketplace based on lifestyle and health. Said Enge, “Counting steps and calories doesn't help a basketball player or a soccer player prepare for their upcoming season or their next game.”
Moreover, while today’s data can help an athlete understand their strengths and weaknesses, the seamless connection to an improvement plan or training prescription doesn't yet exist. Added Enge, “Until this connection occurs, the athlete won't see real results from the data. If an athlete isn't seeing results then they won't remain engaged with the product.”
Chou likewise sees translating the data as also the biggest challenge in driving greater use and adoption for the average fitness wannabee. Beyond using his GPS watch to track his pace and distance while running, Chou would also like to details such as whether his blood sugar was optimized for the long run he was planning or whether his body may need more recovery time. In effect, he’s looking for more data that would change his behavior to prevent injury and support peak performance.
“CES was full of new wearables that are just spitting out data for data's sake,” said Chou. “This is not a sustainable business model. However, I am bullish on the future of wearables as companies figure out how to use this tremendous data to solve specific problems for their niche markets.”
Haroutunian believes some sectors of outdoor will jump on wearables faster than others, currently viewing the larger opportunity in categories such as ear buds and field optics.
“At a time where we really want to encourage youth in sports and outdoors, we really need retailers to be on top of this trend as lighter and more powerful tools emerge,” said Haroutunian. “As distribution options increase, some brands will specialize in serving the outdoor and specialty sporting goods dealers and that is when the market leaders should jump, and the 'peloton' of more conservative shop buyers will follow suit.”
SFIA’s Cove believes the attraction of phone/smartphone integration is key to this whole category, particularly when it comes to attracting Millennials. Observed Cove, “Millennials are connected and smartphone enabled. Brands that see this and can build out their tech strategies around it will sure have a better chance of being successful.”
But he likewise believes the current crop of devices are only touching the surface around how the data may ultimately be used to support not only performance but injury prevention.
“Young female athletes are having knee issues like ACL and MCL tears at an alarming rate,” said Cove. “Data might be the key to understanding this and then create ways to prevent or reverse it.“
WEARABLE’S SHAKEOUT SURVIVORS
Many are also following which vendors will be the ultimate winners in the crowded and hyped category.
Anderson, formerly president of Sportline, believes that while Nike Fuelband and Adidas miCoach are quality products, they focus too much on hardcore athletes to compete with the likes of FitBit for the masses. With its acquisition of MapMyFitness and the launch of UA Record, Under Armour is taking a smarter approach. Anderson argued. He added, “After failed attempts to launch a connected device, UA has taken a page out the Silicon Valley book and is focusing on hooking consumers on its app and platform, which can be accessed by people using many different devices – just like Microsoft did in the 1970s!”
Anderson also believes that although Garmin has developed a strong foothold in the wearable category, too many of the former leading fitness electronic brands – Polar, Timex and Sportline – focused too long on pedometers and heart rate monitors instead of connectivity. The upstarts – FitBit, Jawbone, Wahoo, MisFit, etc. uploaded user data via Bluetooth through intuitive and interesting apps and only looked at the physical device as a way to get consumers hooked onto their platform or ecosystem. Said Anderson, “They knew that their money would eventually be made by aggregating and monetizing the user data – not on the device itself.”
Anderson said that while more upstarts could be found at CES with the category’s low barrier to entry, early movers like Fitbit, Jawbone and MisFit have a distinct advantage, because many consumers are now using their platforms.
“They are building a base of loyal consumers,” said Anderson. “ I believe they will get stronger and it will be hard for new players to break in, unless the new players have something truly unique, like upstart Yoo Fitness, which has very inexpensive price points and a unique user experience.”
THE SPORTING GOODS STORE OPPORTUNITY
As far as traditional sporting goods and outdoor retailers, while the mega-boxes have been largely benefiting from sales of FitBits and other hot product, more-niche products aimed at the hard-core enthusiast and sports-specific athlete will provide a sales opportunity the industry’s retailers.
Chou said data could be used, for example, to solve “niche problems,” such as using arm muscle data to optimize recovery time for baseball pitchers or blood glucose data to tell runners when they should consume their next energy gel. Said Chou, “This data is being used by elite professional teams but would be embraced by lower level teams if they were provided a solution that was easy to understand and relatively inexpensive. This solution would also be unique to the specific sport, creating niche opportunities within each category.”
“As the market matures, though, brands will emerge that focus on specialty distribution, and high quality differentiated products,” added Haroutunian. “I am thinking of brands like Braven, Pelican, Goal Zero and Biolite, who are already moving in that direction (or have divisions that are). The gear will get lighter, more powerful, more affordable, more flexible and more durable, and the time will come for athletic and outdoor retailers to take advantage.”