Tag Heuer, the French luxury watchmaker, recently announced plans to launch its own smartwatch later this year. This venture came about through a partnership with Intel Corporation(INTC), and will be based on Google Inc.'s (GOOG) Android operating system. Designed to bring head-on competition to the Apple i-Watch, Tag Heuer's smartwatch will be offered in a model that will be sold at a base price of $350, but the line of watches will also feature an 18-karat gold luxury model with a price tag of $17,000.
While there have not been many details released to date regarding the actual functionality of the new Tag Heuer smartwatch, the fact that Tag Heuer has teamed up with Intel is notable. Intel has actually formed partnerships with a number of brands, including Fossil and Oakley -- clearly an indication that the company sees a future in wearable technology.
Tag Heuer is not the only brand to venture into the wearables sector. Acorns, an investment app, has also recently announced closing a $23 million round of funding. Led by e.ventures and Greycroft Partners, this is not the first round of funding closed by Acorns, which had previously announced a $10.5 million round of funding. Currently, Acorns is on a dramatic upward trajectory and has stated that the new funding will be used to finance three projects, one of which is the launch of a wearable app.
While Jawbone has experienced some setbacks when it comes to the wearables market, the firm has also recently announced the completion of a new round of funding to the tune of $300 million. The majority of that funding was obtained from BlackRock.
Clearly, the wearables technology sector is poised for takeoff. ABI Research indicates that the wearables market could reach annual shipment levels of as many as 485 million devices within the next three years. Most of that growth is attributed to the ease of compatibility of such devices with smartphones.
WHY THE RAPID RISE IN WEARABLE TECHNOLOGY?
Previously, much of the wearable technology market was segregated into sectors such as healthcare and the military, but due to continuing advances in the various features of such technology, wearables have experienced a tremendous growth surge.While Google Glass was one of the early leaders in the wearables market, errors made in analyzing that market led to poor performance. One of the most significant errors made by Google was its failure to understand price points and its targeting of the wrong demographics. While Google initially aimed its wearable product at everyday consumers, it has since made the shift toward targeting the business sector. This is largely due to the product's relatively high price, which has proven to be too steep for the consumer market. Reports indicate that mainstream consumers tend to resist paying more than $200 for a smartwatch, even if it features multiple functions. (See article: The Business Of Google.)
As technology has become increasingly miniaturized, wearable devices are now available in a broad spectrum of options ranging from watches to glasses, and wireless connectivity and reduced cost for sensors have made it possible for wearable technology to finally go mainstream.
With consumers becoming increasingly interested in trends such as fitness, healthcare, socialization, and messaging, wearable technology has begun to attract a booming level of interest from consumers. Consequently, more and more retailers and emerging startups are fighting for a stake in this rapidly evolving industry.
While the wearable technology industry may have gotten off to somewhat of a rocky start with Google Glass, it is no longer possible for investors to ignore this rapidly growing technology sector. Having expanded far beyond the phase where the buzz surrounding this technology was classified as hype, wearables are now the latest must-have. Since the release of Apple's i-Watch, a flurry of other devices either have been released, or are slated for release.
IS INVESTING IN WEARABLE TECHNOLOGY RIGHT FOR YOU?
If you're planning to invest in wearables technology, but still are not certain whether it's the right move, it is important to consider that while wearables are still relatively new, it is a sector that is still on the cusp of full-blown growth. IDTechEXestimates that the total value of the wearables sector could increase to $70 billion by the year 2024. Although big names in tech, such as Google and Apple, will likely continue to play a critical role in moving the wearable market forward, there is also still ample room for new startups. (For insights into Apple's past efforts to pave the way for increased presence in the wearable technology market, see article: Apple's Latest Hire Suggests A Future In Wearable Technology.)Due to what has been termed as "consumer demand potential," the potential for a significant return on investment in this explosive sector is very real. Even so, while the wearables market is evolving rapidly, it is not completely without hurdles that must be crossed.
POTENTIAL CHALLENGES WITHIN THE WEARABLES TECHNOLOGY SECTOR
If there are challenges within the industry, they are likely related to the actual design of wearables. Although the watches have proven to have appeal, an increasing number of consumers are now demanding wearables that resemble other types of jewelry. This is particularly true among female consumers. For instance, according to a report published by CNet, women may be willing to shell out more money for wearable technology, but they pay more attention to the size and aesthetics of the device.When it comes to defining the largest potential market for wearable technology, investors may find it to be a good idea to cast their attention overseas. According to a report by CXOtoday, India has the potential to become the largest market for wearable technology, such as fitness monitors and smartwatches. The Digital Consumer Tech Survey found that Indian consumers ranked highest in terms of their interest in purchasing wearable technology. In fact, four out of five consumers in India indicated an interest in purchasing wearable tech. Of the 6,000 people who participated in the survey, 80 percent indicated they were most interested in purchasing fitness monitors, while 76 percent had an interest in smartwatches, and 74 percent were interested in Internet-enabled glasses.
THE BOTTOM LINE
With an increasing amount of wearable technology making its way into production, companies such as Google, Apple, and Intel are vying to make their mark. At the same time, more and more startups are emerging to take their slice of the market, as well. To be certain, Apple's smartwatch has gained a head start with its release out of the gate, but it remains to be seen which company will emerge as the leader and dominate the wearable technology market.By Brett Relander
Source: http://www.investopedia.com/articles/investing/042815/beyond-apple-investing-wearable-technology.asp
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