Gownder was more charitable than most analysts toward the many wearable products that will be shown at CES, saying just 80 percent will fail, not the 90 percent cited by many of his peers. But in the long term, the failures really won't matter. When Internet commerce started, Pets.com and other sites failed, but many others thrived. "This is a time of great creative destruction for wearables," he said.
The Samsung Gear S smartwatch.
Part of the market dynamism behind wearable products is that companies like smartwatch maker Pebble have driven early investments through Kickstarter contributions from many smaller investors, creating a new wave of financing, Gownder noted. Plus, the fundamental components of smartwatches and other wearables, including sensors, are not that expensive. The best small startups will be bought by large companies, as Intel did with its March purchase of Basis Science, which made a health-tracking wristband.
Impact on workers and marketing apps
Businesses foresee a clear return on investment in wearables, both for operational efficiency and in helping to shape the customer experience, Gownder said. He ticked off several examples already being tested or deployed, including an unusual one by mining and construction company Thiess of Australia.
Thiess is trying out wearable devices such as the Amiigo activity tracker wristband to measure the blood oxygenation, body temperature and movement of its field workers to find out if they might have been bitten by an aggressive, venomous snake called the Inland Taipan that lives in the Australian outback. (Gownder described the application and others in this presentation, starting at 5:50 on the counter.) The company can centrally monitor such worker data in real time to provide an emergency response for an injured worker.
Smartwatches could also be a good candidate for use in mobile payments, a prospect that Apple has described with its NFC-ready Apple Watch. In the U.K., Barclaycard offers customers a bPay wristband that can be used to quickly pay for small items, such as tickets for the subway or food and drinks at soccer games of the Southampton Football Club, Gownder said.
Virgin Atlantic also evaluated smartwatches alongside Google Glass with customer service agents at its upper-class lounge at Healthrow Airport, Gownder said. Glass allowed the agents to look directly at their customers, while the smartwatches required them to look at their wrists, which led customers to feel they were being ignored.
Another intriguing marketing possibility with smartwatches are the use of haptics, those vibrations emitted by smartphones and other devices, as a means of helping direct customers through a department store or mall to reach a location for a sale or special offer. One buzz could mean to turn left, two buzzes to turn right and three to stop. Haptics could be used in similar ways inside of shoes and garments.
In another marketing-focused example that Gownder described, sunscreen-maker Nivea launched a wearable tracking band in Brazil that could be torn out of a fashion magazine and placed on a child's wrist, then paired with a smartphone app to deliver the parent a notification if the child moved beyond a pre-set sun exposure range.
One of the more provocative marketing possibilities of the Apple Watch is its Digital Touch feature, which allows the wearer to share his or her heartbeat with someone else. When customers share a heartbeat, they can then get personalized messages in response that either correspond to the heartbeat or are designed to alter the mood behind the heartbeat. Whether the technology really works or proves to be a gimmick is anybody's guess.
"Creating marketable moments of this sort will require cultural engineering that only the right brands can pull off," Gownder said.
The downsides to wearables: Privacy, security
Google Glass has been criticized because of concerns that it invades people's privacy. For instance it isn't always clear when the user is taking a photo of someone. With smartwatches, or other monitoring devices, workers may have concerns about being tracked by their employers, even in the interest of safety.
When delivery trucks had GPS devices installed in their vehicles a decade ago, there was some worker backlash, although that seems to have died down.
In the case of Thiess in Australia and with other company trials, "the primary purpose is not to track workers, but to augment the company's ability to get information quickly," Gownder said. "Companies need to be careful about it, but if their intentions are right, there won't be that much of a worker backlash."
When GPS tracking started in truck fleets, the purpose was to make sure drivers were staying on their routes, which is different from how smartwatch monitoring of workers — so far — is being evaluated, he said.
The biggest worry for company managers from the use of smartwatches and other wearables won't be over worker tracking, Llamas said. It will be over the security of the data these workers gather and forward to the cloud or to corporate servers. While pairing a device with a smartphone might seem to offer all the networking security defenses already established through VPNs and other means, there will inevitably be some holes. If devices communicate directly over cellular wireless without the need for a smartphone, there could be more potential vulnerability.
"Hackers would love to get into wearables," Llamas said. "Just think of all the information they could collect about the user and where the user is, or even what the employee sees through a camera on a device. Hack into that kind of data and a hacker could watch a user type in passwords, and then he's about to become a very rich man."
In other words, smartwatches and other wearables are likely to open up many new markets for hardware, software, applications and even security vendors. It's all just starting and CES is about to offer the world a better glimpse.
This story, "Big smartwatch push at CES anticipates Apple's entry later in 2015" was originally published by Computerworld.