Several of our customers believe they may have found the Next Big Thing – and some of you may have it on your body right now.
In our Community Catalog, you’ll find a few examples of motifs generated by your fellow investors that relate to the new field of wearable technology. This fledgling sector involves products that are worn for extended period of time that provide data intended to benefit the user.
A few of the most common uses involve health and wellness, where consumers are able to track their activity for weight loss or more ambitious fitness purposes; health care, which gives patients and other consumers real-time information on the body’s vital signs; and more commonly seen entertainment products, like Bluetooth headsets, smart watches and even Google glasses.
A recent Credit Suisse report forecasts that we’re at an inflection point in market adoption for wearable technology. This is being driven by the growing installed base of smartphones, improvements in component cost and performance, and established software ecosystem and new app business models.1
The report projects wearables moving from single-function, hard-to-connect, “dumb” devices to multifunction, always-connected, smart devices.
Credit Suisse sees a potential 10-fold increase in the sector’s total available market over the next three to five years to $30 to $50 billion. “While early,” the report notes,” it’s a mega-trend with far-reaching implications.
For investors, of course, the question is — who stands to benefit? The CS report cites three tech giants already at the pole position: Apple, Google and Broadcom. The first two companies are helped by the dominance in the installed software base of smartphones, while analysts believe that Broadcom’s strength in connectivity/GPS could drive a 30% share in wearable semiconductors in 2015.
Apparel maker also could gain strength, particularly since many top names have been at the forefront of the sector already, beginning with watches and now at the ramp-up of the fitness band craze. The Credit Suisse analysts suggest Nike, Adidas and Under Armour have the current early-adopter advantage.
The report notes that a key to growth will be how much innovation leads to product cannibalization, but early trends suggest this could be an investment idea worth investigating.
1Credit Suisse research report, May 17, 2013.