Fitness and Wearables: Smart Buds

A few years back, devices that sat on your wrist and were capable of collecting data, including audio and video, on your driving, eating, and exercising habits were seen as the next big thing. Then, after investing much time and resources, companies like Adidas, Nike, and Under Armour followed Intel and Microsoft in an exodus from a market that once seemed like the Promised Land.

The problem was that “hardware is hard and software even harder” and this market proved more limited than previously imagined. While athletes welcomed fitness trackers because they could monitor their heart rate, movement, and training regime, the general public was not convinced. This dashed the hope of sectors such as insurance, for example, that envisaged a range of new products that could use the data to nudge customers into undertaking a change in lifestyle through the enticement of lower premiums.

The launch of the Apple Watch in 2015 gave wearables a fashionable fillip. CCS Insight, a market-research company, estimates that 85 million smartwatches were sold worldwide in 2019, increasing to 137 million in 2022 when the market will be worth over $27bn. However, such growth would mask the sliding sales of fitness trackers, which are expected to drop from 43 million to 39 million over the same period.

Today, the market for wearable devices extends beyond the wrist with the emergence of a new category, known as “hearables.” These “smart buds” are technically advanced devices that sit in the ear and augment human intelligence.

Hearables – the New Wearables

Nick Hunn, wireless evangelist, product designer, and CTO at WiFore, is credited with coining the word “hearables” in a blog back in 2014. In it, he explains that infatuation with the wrist began when watch sales plummeted after younger generations began using mobile phones to tell the time. With ABI Research reporting at that time only 47 percent of people regularly used a watch, the wrist was seen as vacant real estate going begging.

Wearable tech will provide an alternative to the wrist, but it will do so by enhancing an existing experience.
_{Nick Hunn, CTO, WiFore}

That appealed to a tech industry looking for the next high-volume consumer product and kicked off a frenzy that everything was going to be wearable. The problem was that concepts to replace traditional watches invariably involved devices that connected with smartphones. That, says Hunn, meant manufacturers were desperately pushing technology onto consumers instead of adapting from known behavior and preferences.

“That seemed a strategy likely to fail as wearable technology is more, rather than less personal,” he explains. “Instead, I felt a new generation of technology would revolutionize the way we listen to music, as well as provide an alternative to the wrist for vital signs and fitness sensors, but it would do so by enhancing an existing experience. That’s a powerful combination to create a successful market.”

A Touch and a Nod The Dash Pro, built by Bragi, a German start-up, is a combination of smart earphone and personal assistant. It can be controlled by touch or by head gesture.

They were prescient observations. Wearables – which include fitness wristbands, heart-rate straps, and even Google Glass – are noveltybased products and require consumers to put something new on their body. After a few uses, many are left forgotten in closet draws. Earphones were already ubiquitous, so they had the potential to make a lasting impact in the wearable space.

Smart, connected headphones already existed in 2014 but, soon, reductions in the power required by Bluetooth headsets meant that both voice and stereo music could be streamed to headphones or earbuds running on small batteries. Bragi, a start-up based in Munich, Germany, was arguably one of the first to cut the cord when it released The Dash in 2015. The Dash was certainly the first smart, Bluetooth stereo earbud pair, controlled by head gestures and touch, with a simple personal assistant capability. It also featured 2GB of memory for uploaded music, while a heart-rate sensor and step counter provided feedback for athletes, removing the need for them to carry multiple devices. Apple AirPods, Galaxy Buds, and other competitors followed and Bragi was swamped in the market to the point that this year it announced it was pivoting out of the hardware business to concentrate on software for hearables.

The Dash was a breakthrough because it offered convenience, lightweight comfort, and flexibility that competing Bluetooth earbuds and headphones couldn’t match.

There was no “spaghetti” cord tangle between the buds and ears, so it provided a full range of motion that wired headsets couldn’t match. What makes the ears such valuable “property” is their location and function. Their position near the mouth makes them better at understanding utterances than smart speakers, like Alexa or Siri, found halfway across the room.

Fitness and Wearables: Voices in your Head

They are also an exceptionally good place, physiologically, to measure many vital signs because, unlike the wrist, the ear doesn’t move about. This makes them more reliable for taking measurements. The Dash, for example, had an accelerometer and pulse oximeter sensors – and that was all, in addition to playing your favorite tunes.

In his original blog, Hunn estimated that the hearables market would be worth over $5bn by 2018. In a report last year, MarketResearch estimated that it had already exploded to be worth $14bn in 2017.

“That is almost entirely down to the success of the AirPod, which certainly has taken Apple by surprise,” Hunn says. “They felt it was a product they had to develop once they took the jack socket out of iPhones, but have been overwhelmed by the response.”

Apple launched two new AirPod models at the end of 2019 with an all-new form factor. Ming-Chi Kuo, an analyst at TF International Securities, is “positive” on the demand for AirPods and Apple’s wireless headphones market share but he believes the “all-new design” of one of the new models could boost the replacement demand and attract new users. He estimates AirPod shipments will reach 52 million units in 2019 and 75 million to 85 million units in 2020.

Neck-on-Neck: Race For the Ears Galaxy Buds are giving Apple’s AirPods a run for their money. Both are true in-ear, wireless headphones, but Samsung offers more features and greater customization at a cheaper price, testers say.

By some projections, the hearables market could be worth as much as $23.24bn by 2023, but to do so the industry needs to overcome significant challenges. The first is price. While it is difficult to take a ten minute walk in a major city without seeing at least one person sporting an AirPod or cheaper knockoff, hearables are not yet as ubiquitous as might be expected.

One problem to their becoming mainstream is price point, says Kow Ping, executive director and cofounder of Hong Kong start-up Well Being Digital (WBD101), which supplies highly accurate sensing semiconductors to manufacturers of hearables. He believes the retail sales price will need to fall to below $100 for mass pickup. “If you have something super-duper accurate and good for them [consumers] but priced out of the reach of the majority, then it will not get traction,” he explains.

All-new design in one new model will boost demand and attract new users.
_{Ming-Chi Kuo, TF International Securities}

Hunn explains that earlier developers overloaded the technology and had trouble getting product out. “It is expensive and challenging to condense all that technology down to two earbuds that include microphones. Many companies struggled to get the audio engineering right, rather than having a tinny sound,” he says. “Then they struggled to have a product with batteries that lasted more than an hour or two.”

Apple’s success comes because they worked out what technology was essential, including an antenna at the jaw level to transmit a signal and ensure the two ear buds are synchronized. They then wrapped it in a cool package – and ditched the rest. Product defects and pricing in the wider industry are identified as points holding hearables back, in addition to health and safety regulations that address such issues as hearing loss. The World Health Organization estimates that by 2050, over 900 million people worldwide will have disabling hearing loss.

Hearing the Future

In the United States, for example, by 2020, there will be close to 45 million people suffering mild to moderate hearing loss with 20 million of them aged between 20 and 69, according to the Journal of the American Medical Association (JAMA). Traditional hearing aids have low penetration within this demographic.

Retail prices need to fall below $100 for mass pickup and traction.
_{Kow Ping, Well Being Digital}

In the US in 2017, an Over-the-Counter (OTC) Hearing Aid Act was passed that instructed the Food and Drug Administration to create a class of OTC hearing aids for people with mild to moderate hearing loss. While such developments can have an impact on the hearables industry, it also indicates a potential convergence between hearables and traditional hearing aids that may give the industry an extra boost. Beyond that, a new set of Bluetooth specs will be available in about a year that will make voice control much easier and enable hearables to be much more flexible, such as in sharing music with friends.

Fitness and Wearables: Budding Prospects From around $600 million in 2013, the market for smart wearable devices is expected to reach over $30 billion in 2020; almost half of that will come from new players in today’s consumer electronics markets.

“I think the next generation of hearable products will be about incorporating more sensors and then drawing back data,” says Hunn. “In terms of the generation after that, well AI assistance is definitely coming and that will enable many new opportunities for revenues and players.”

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