Sitting in a car park with sleet and snow all around and only an ipad to hand I decided to rant to myself on whether one of the Big-Boy Sports Device companies might soon encounter difficult financial time. As I say an introspective rant but thinking it through afterwards I still think there are some elements of truth here.
Fail? Well; probably not. But things they are a-changing.
There were very many new additions to the sports-gadget market in 2014. Some of these new editions were from the Big-Boys but many were from smaller companies and even start-ups.
We’ve seen the Polar V800, Garmin 920, Suunto Ambit3, Vivofit, Wahoo’s TICKRs, Epson, Pulseon and very many more. The growth in the global running/multi-sports/activity tracking is one of the drivers behind this. It’s a big market, that’s getting bigger. There’s Samsung Gear and Apple iWatch and Microsoft Band; it really is a big market. It’s not just sports gadgets; it’s the more encompassing term of ‘wearable technology’ as well.
When you look at a Garmin 920XT; it’s a nice piece of kit. At a £300-odd price tag it’s expensive when compared to its, probably-low, manufacturing cost. There is a big margin being made there on new adopters of such pieces of kit. Ask anyone who has ever bought anything new from apple! It is a potentially profitable market as well.
Except what is starting to happen now is being further driven higher by emerging technology.
One simple example is optical heart rate technology. At a basic level the technology ‘just’ avoids a rather ugly and uncomfortable strap being put around your chest. It doesn’t provide any particularly super-new insight into the human body…it just does an existing thing (taking a HR reading) in a different, perhaps more convenient, way. This emerging optical technology seems to be mainly being used to create new and ever improving ‘lifestyle bands’ but of course also significantly encroaching on the more ‘serious’ sports space.
So there are new companies coming into the market playing on ‘convenience’ and maybe also on ‘aesthetics’. These new products will eat into the market share of the big boys as these factors are important to very many people.
Then you could argue that Apple will also take their cut of the existing market, perhaps also growing it at the same time. Samsung have tried to do the Sports-wrist-lifestyle band-thing with the miss-fired Gear.
You look at Samsung and Apple and you see companies at the peak of their financial potential and dominance. Yet, Samsung phone market shares in Asia are falling (recent profit downgrading due to competition) and you have to ask how many times Apple can create a new phone that seems near-identical to the one two models earlier (but marginally thinner). They have cash and need to grow to continue to grow the share price.
Another example is the rather niche market of cycling power meters. Probably around a grand, a couple of years back, for a half-decent one. Soon a couple of hundred quid might get you a reasonable one. New entrants, new technology, new threats to the existing players.
TomTom Multi-Sport Cardio – a nice and relatively inexpensive triathlon product. Again with optical technology. It’s not quite there yet as a complete offering but I’d merrily use one and be mostly happy with it. The multi-sport cardio has the might of TomTom behind the product development and marketing – perhaps this new venture for them is driven by smartphones eating into their typical navigation market? but it’s an obvious move for them to use some of their existing capability as well as new technology to attack a growing market.
Then there’s the ‘activity tracking’ side of the market. Another huge market. Perhaps for athletes to a small degree but MANY other people are interested in glorified step-counters. That’s a bit unfair as ‘they’ probably would be quite interested in technologies that could monitor blood pressure, blood sugar levels as well as heart rate too. Your aunt or your granddad might benefit from these products – they promote a healthier lifestyle to a partial degree whilst also collecting useful health data; sometimes data that typically only a doctor could give you. Fitbit have done well here and have some imminent new products (Nov 2014). Garmin vivofit, Microsoft Band and Polar Beat are interested in this market…but so are Apple and Samsung.
I would content that no-one is safe. Ask Mr Blackberry or Mr Nokia. Markets can change very quickly and often for not-so-obvious reasons (unless you have hindsight). So low-tech SMS messages massively grew the profitability of mobile phone markets as companies simultaneously near-bankrupted themselves buying 2.5/3g network licences.
Why has Blackberry failed? Could just be too small a screen and no proper app market. Often the simple things…
And Nokia? Maybe they got on the Android bandwagon too late.
I’m always one for ‘openness’. The Android platform and the original Microsoft Windows platform have grown massively due to an open published ‘standard’, Apple have grown based on a platform albeit a bit more restrictive for non-Apple companies to leverage it. ANT+ and Bluetooth offer a communication standard but not a platform for sports products. So you see many of the new companies trying to develop a little world of their own in an app, only then to realise that they can’t entirely meet the needs of their target market and then have to open it up by allowing bits of data or kit in or out of their mini-platform.
We see Garmin realising this to a degree by recently enabling apps to start to be developed for the 920 (like Suunto). If you can’t solve the entire needs of your market you need some form of openness to allow other companies to help you do it. Look at SportTracks…does more than any other product but only because it allows external vendor plugins to work. This is a trend that will continue I would contend.
So. What about 2015 then? What super new products are Polar, Garmin and Suunto going to release? Sure they are going to probably introduce many incremental model updates that will be great. I can’t see them creating new market segments though. Whereas I can see other big companies encroaching on their space and I can see lots of new small crowd-sourced start-ups coming with niche and innovative new ideas. It’s a wearable tech market that will boom – but “Who will dominate and who will fail?” is ultimately your guess as much as mine.
My only prediction is that I think we will eventually see one or two sports/fitness/health data platforms emerging (eg Google Fit) and dominating the data storage – then niche and mainstream applications will feed off that data. That’s probably one for 2016 or beyond though. But sometimes things move quicker than you expect.