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Intense Competition in The Wearable Device

By Ding Yu Shan
Published: Feb 27,2014

Retired National Taiwan University professor, Zhang Jian-han has a mild case of Alzheimer’s disease. As a result, Zhang Jian-han’s family members bought a smart watch for him wear so that they can know where he is going at all times. A few days ago when Zhang Jian-han went missing while hiking in the mountains, they used the locator function on his smart watch to smoothly carry out a rescue operation.

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In addition to entertainment applications, there is enormous space for the development of smart watches. The key rests with first-person applications. Industrial Technology Research Institute’s Industrial Economics and Knowledge Research Center (IEK) Electronics Division manager Alex Hou states that wearable devices are being developed from the standpoint of the user’s body as a starting point. They are closely integrated into everyday life in order to have the capacity to carry out applications that mobile devices are unable to do.

GoPro is a successful case in the first person application market. Facing the fierce competitiveness of the digital camera market, GoPro lets exercise lovers wear it on their bodies and instantaneously take pictures of their athletic movements. This has the effect of allowing people who look at the pictures to appreciate the same scenery and savor the same physical experiences.

It is this kind of first person camera as it main feature that has allowed GoPro to slip into the video camera market and experience explosive growth at 13.7% in 2012, with the second highest amount of global video camera shipments, second only to Sony at 24.5%.

Low Degree of Hardware Difficulty: Hundreds of Companies are Contenders

To ICT companies, wearable devices are a new form of product; however, in actuality, specialized domains, such as the military, medical etc., are not unfamiliar with wearable devices. Five years ago, the European Union already started to develop smart bodily devices used to assist people with reduced mobility.

Owing to the currently over 80% level of similarity between parts and components and specifications of wearable devices and those of smart devices, factories can make use of preexisting supply chains to manufacture products. The degree of difficulty for hardware to enter the market is not high; in addition, there is diverse product development. This makes the initial market for wearable devices different from the market for mobile devices, such as smart phones and Tablet PCs, which are concentrated in a few main large manufacturers, such as Apple and Samsung etc. Instead, there is a situation with hundreds of companies as contenders.

Consequently, in just a short time, the wearable device market, with its relatively low level of technological obstacles, has had a considerable number of companies enter the market. According to IEK pre-estimate, in 2018 the market opportunities should exceed US$ 20 billion. Analyzed among these, the market size for key components is expected to reach US$ 4 billion. Therefore, we know that with the situation of the PC and mobile device product shipments slowdown, wearable devices can be called the industry’s stars of tomorrow.

ST Microelectronics simulation and MEMS and sensor hub enterprise division technology sales manager Li Juan-yu states that wearable devices are experiencing the fastest growth in the domains of these three applications: at home medical treatment and care, information and entertainment, and exercise and fitness. These applications also occupy the greatest market portions. Markets besides these three large domains also include specialized markets for domains such as safety and security and military uses etc. Although they are smaller scale, the potential for growth cannot be overlooked.

Figure I: The market patterns for five wearable device applications are polarized.
Figure I: The market patterns for five wearable device applications are polarized.

The Polarized Development of Wearable Devices

When analyzing the current development of wearable devices, they can clearly be divided into two types. One type is from thinking about traditional information devices, and they are products such as smart glasses, smart watches, and bracelets that tend towards information and entertainment applications with ICT enterprises as the main market.

Manufacturers hope that these products can be manufactured on as large of a scale and become as ubiquitous as smartphones to bring about characteristics of massive business opportunities. Alex Hou states that in the long term, these kinds of products will finally get bogged down in specification and cost competition, and profit margins will be comparatively low.

The other type is specialized markets. It consists of each kind of different niche market, such as medical care, safety, security or specialized distinctive applications. It is characterized by high barriers to enter into markets, difficulty providing supply chains, research and development, and long periods of certification. However, due to this, the profit margins are much higher than for the first type.

According to IEK research, niche markets for merchants of wearable devices are quite possibly much greater than for consumer markets, and they are taking the form of what is known as “The Long Tail “model.

However, regardless of which type of market, other than personal devices, they will also promote related technologies, such as communication, electric supply, sensor, human-computer interface, display technology, software, and applications etc., that will gradually receive serious attention and also attract semiconductor manufacturers.

The Deciding Point for Human-Computer Interface

Both smart watches and smart glasses have display screens. In comparison accessory or wearable devices (such as smart bracelets, rings, or clothing) are only for the purpose of physical data and also have advantages. They also have sufficient output and input components to integrate with Human-Computer Interaction (HCI) technology. For smart glasses, because the hardware development is less mature, initial research and development costs are high and the manufacturers that can develop them are very few; however the development potential is the highest.

Figure II: A layout of the major manufacturers' patented wearable devices (Data Source: IEK)
Figure II: A layout of the major manufacturers' patented wearable devices (Data Source: IEK)

Research Center (IEK) Electronics and Systems Research Division analyst Chen You-yi indicates that Human-Computer Interaction technologies are the keys to victory for wearable devices, and included among them are the following three types: sensor technology (such as voice control, eye tracking, gesture recognition, motion sensors, context awareness, and vital sign monitoring), display technology (such as flexible displays, microprojectors, and transparent displays), and content operations (such as augmented reality, virtual reality, physiological analysis etc.). Among them, motion sensor interactive technology is the most important.

Chen You-yi states that wearable devices are closely linked to human lifestyles. Consequently, users’ experiences determine the life and death of wearable device markets. “To wear or not to wear is the key question,” he says. Therefore, decisions about Human Computer Interaction technologies must go back to the users’ bodies, have insight into the demands and gaps in the users’ experiences, and in the process uncover what is approaching human nature in intuitive Human-Computer Interaction technologies before it is possible to increase their degree of cohesiveness for users.

Because smart glasses, watches, and bracelets are a type of product that is still relatively new, consumers appear to be extremely unfamiliar with how to operate them. Furthermore, owing to the size of the devices, watches and glasses have display screens, but the measurements are usually not large, the scope of the touch controls are too small, and they cannot carry out too many tasks. There is no way to transplant cell phone users’ experience; therefore, Human-Computer Interaction technologies other than touch controls appear to be extremely important.

Figure III: Through integrating many types of Human-Computer Interaction technologies, wearable devices can create many types of different applications, such as 3D projection, gesture interface, voice input, and cloud, and they can enable users to directly create virtual 3-D objects.
Figure III: Through integrating many types of Human-Computer Interaction technologies, wearable devices can create many types of different applications, such as 3D projection, gesture interface, voice input, and cloud, and they can enable users to directly create virtual 3-D objects.

The current situation of development has not matured beyond the scope of gesture recognition, leap motion, and voice controls.

Nevertheless, because voice control can be easily subjected to environmental interference, there is a bottleneck that must be overcome for natural voice language interaction. Therefore, the body language of the human limbs, which has the greatest variation, is becoming the most important interactive technology for wearable devices.

In order to better satisfy users’ experiences, wearable devices will simultaneously integrate two or more types of interactive technology, such as integrating language and hand gestures or integrating multiple context-awareness technologies etc. Although integrating a variety of technologies may cause an increase in the complexity of operating wearable devices and an increase in the difficulty of App development, it will also bring about more applications and possibilities for wearable devices.

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