Vertical Market Expertise Needed for Success in Wearables

By Brian Pitstick - November 20, 2013
This blog was written by Brian Pitstick, a 17+ year marketing executive in the Fortune 500 technology market. He is currently a guest analyst at Moor Insights & Strategy where he writes about his passion for the emerging wearables market leveraging his strong background building innovative product solutions.  Brian was recently executive director at Dell corporation, where he headed up innovative and award winning consumer products like the Dell XPS 12/13/18,  Dell Inspiron Duo, and the Dell Streak 5.  You can find Brian's biography here. I have seen a number of recent announcements by hardware device manufacturers like Asus and ZTE saying they plan to get into the wearables market.  This is not surprising given this is a hot market right now and projected by some to be major growth spot over the next 3-5years (ABI Research claims 160M devices will be sold by 2017).  With buzz about Google Glass and market projections, these companies don’t want to miss out on the next big market.  I am very skeptical though that hardware companies like Asus or ZTE can be successful in this market. Successful companies in the wearables market will need to approach the industry with a vertical mindset and bring more to table than just technology device expertise.  Success will depend on deep customer understanding and strong credibility as an expert with their target audience. Wearables will be divided into two main categories:  1) devices that are vertical in nature and address a specific use case (e.g. fitness wearables like Nike Fuelband & Adidas miCoach Smart Running Watch) and 2) devices that are horizontal in nature and provide general purpose use (e.g. Samsung Galaxy Gear). Vertical markets will be some of the first to see adoption as they serve specific targeted use cases that provide strong value to their end-users.  Fitness wearables help aid people seeking to lose weight or stay in shape.  Google Glass applications for doctors or service technicians will provide augmented information to help complete their job.  To be successful, companies here need to focus on the end-user and a problem they are trying to solve.  Understanding the customer and helping them achieve their goal with great user experience will be key.  As such, having credibility in target industries will be critical. Horizontal markets will be slower to develop.  A wearable device is much different than a smartphone, tablet or PC for simple reason that you wear it on your body.  People are not looking to add more devices and putting technology on your body will require a strong reason to do so.  This is why vertical use will be faster to adopt as they have specific use cases to incent adoption (the utility will be higher initially). For the horizontal market, it is a fallacy to think they you just need to show up with the best technology, a good price point, good marketing or a great distribution strategy.  Even for this segment, you need to have a vertical mindset.  As a general purpose device, fashion, comfort, and a simple user experience will be critical.  Outside of tech enthusiasts, you will not see wide adoption of horizontal wearables without this.  Companies here need to bring credibility in the fashion & jewelry industries and know how to design a watch, bracelet, ring, or an article of clothing people will want to wear.  This too will impact vertical markets. As such, companies like Asus, ZTE, and even Samsung will struggle to drive adoption unless they find a way to bring in fashion credibility and expertise to their offers.   My guess is this is why Apple has yet to announce their rumored iWatch.  They fully recognize the importance of this and want to get the design and experience right before rushing it out (and they are starting from a position of credibility on great design).  Is it surprising that they recently brought in an exec from Burberry to run their Retail stores? To win in wearables a vertical mindset will be critical.  Two types of players will emerge:  1) existing industry experts and 2) technology based companies.  Technology based companies will need to build vertical market credibility to be successful.  A quick way to achieve this is through building affiliations or partnerships with existing industry experts.  Longer-term they need to build a platform user experience that builds strong customer knowledge and intimacy (e.g. Big Data analytics of fitness wearables).  For horizontals, technology companies can look to partner with a fashion expert to drive design and could even consider co-branding and joint marketing.  On the flip side, industry experts will need technology expertise.  More than likely, they do not have these teams internally so will need to look to build partnerships with major tech companies or other technology design partners that have this expertise and resources. If you have an opinion on this article, please drop me a comment or follow me @bpitstick.  
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