Future Trends in Wearable Technology: From Health Monitoring to AI Integration

Since 2013, the hottest buzzword in the tech sector has been “wearable devices.” From Silicon Valley to India and then to Zhongguancun, this term is invariably heard wherever IT professionals gather. By 2014, the development path of wearable devices was fraught with controversy, with some organizations even predicting a downturn in the wearable device industry. However, other analysts forecast that over the next three to five years, the market size for wearable technology is expected to grow approximately tenfold from current levels to reach $50 billion, representing a growth rate five times faster than that of the mobile revolution.

Smartwatch-type products have two core application scenarios: convenient information notifications and signal control, as well as monitoring related to sports and health. We believe that the hotspots for internet healthcare startups will evolve from app manufacturers focused on process reengineering to the smart hardware sector providing continuous data monitoring. VCBeat has engaged with numerous smart hardware teams in the health sector; those positioned upstream in the industry chain face less competition and have greater growth potential compared to consumer-facing (2C) startups. For instance, a Beijing-based startup is developing a wearable total solution centered on underlying chips, offering modules capable of continuous, active measurement of key physiological indicators. This company is poised to ally with chip manufacturers to provide turnkey solutions for smart hardware vendors, thereby enabling in-depth applications in health monitoring and real-time/long-term feedback.

What Trends Will Define This Emerging Industry? VCBeat Excerpts the Market Analysis Section from Raconteur’s Wearable Technology Report, Hoping to Offer Fresh Perspectives.

The launch of the Apple Watch popularized the concept of wearable devices among the general public, making Apple the latest tech giant to enter the wearable technology sector.

However, not every company possesses billions in cash reserves like California’s blue-chip tech giants such as Apple. For many startups, it remains unclear where to secure the urgently needed funding to support product development; coupled with banks’ reluctance to assume risk, this has left many promising concepts stuck in the design phase.

While personal savings can support cash flow during the initial stage, securing funding from other sources is often necessary for rapid growth and entry into more competitive markets.

According to research by UK-based Juniper Research, global retail revenue from smart wearable devices is projected to reach $53.2 billion by 2019. This clearly explains why venture capitalists are so interested.

Therefore, an increasing number of venture capital firms are investing to support entrepreneurs in launching their projects.

Stephan von Perger, an investor at the London-based venture capital firm Wellington Partners, stated, “The market and investment institutions are currently very active; they are not short of capital. Their primary focus is on trends, specific sectors, and technologies. For instance, what we seek are ambitious entrepreneurs whose companies demonstrate strong operational performance and innovation—that is exactly what we are looking for.”

Crowdfunding
However, it is not only venture capitalists who are eyeing early-stage wearable device companies; crowdfunding platforms such as Kickstarter and Indiegogo are also scouting for projects. For instance, Pebble Watch raised $10 million on the crowdfunding platform Kickstarter in 2012.

Nick Levine, Director of Business Development at Crowd2fund, stated, “Over the past 18 months, consumer and investor interest in wearable technology has continued to grow.” Therefore, crowdfunding is the core channel for connecting with consumers in the early stages.

Moreover, equity investments in the wearable technology sector typically qualify for the UK’s Seed Enterprise Investment Scheme (SEIS) administered by HM Revenue & Customs (HMRC), which offers generous tax incentives. Although early-stage equity investment carries high risk, it may also yield substantial returns in the future.

Despite potential conflicts with venture capital firms, some investors recognize the benefits that crowdfunding can bring to startups.

von Perger explained, “Crowdfunding is actually beneficial to a company’s development before venture capital and specialized expertise are introduced. Similarly, I believe this represents a positive trend rather than a threat for venture capitalists. Crowdfunding is well-suited for early-stage companies, particularly when early products involve many uncertainties; however, it cannot provide the professional expertise that venture capitalists offer.”

The Direction of Wearable Devices
In recent years, attention and capital have been concentrated in the fitness wearables sector, with the trend recently shifting toward smartwatches. The popularity of the Apple Watch indicates strong demand for new products in this field, and some consumers are already anticipating the next wave of innovations.

However, Ciaran Rooney, a lawyer at the law firm Blake Morgan, stated, “The tech entrepreneurs and investors I have dealt with give me the impression that the smartwatch phenomenon may be just a flash in the pan. At a fundamental level, smartwatches essentially replicate the core functionalities of smartphones or other existing products, while adding an unfriendly interface and limited connectivity. These are facts that consumers will not overlook.”

Rooney stated that the truly exciting aspect of app-enabled wearable hardware lies in its ability to monitor, record, and report personal health information, which holds significant potential for individuals working in challenging, hazardous, or inefficient environments.

Moreover, wearable devices may also dominate in many other fields, such as apparel or smart jewelry.

Design Focus: Hardware? Software?
Jonathan Jackson, a partner specializing in intellectual property at D Young & Co., stated, “Many companies are beginning to fill gaps in their capabilities. Firms that previously focused solely on technology are now acquiring or partnering with companies possessing design expertise. For example, fashion accessories retailer Fossil has collaborated with chipmaker Intel to develop stylish products for the wearable device market.”

However, hardware prices are expected to decline.

There are signs that this technology is becoming more affordable, with existing wearable devices being produced at lower costs by Chinese developers who are placing greater emphasis on intellectual property awareness, while others question whether hardware will remain the industry’s focal point.

From a retail perspective, the majority of focus remains on wearable hardware, whereas more investors appear to be interested in the underlying software of these devices.

Indeed, hardware typically requires substantial capital to satisfy large-scale tech enthusiasts and crowdfunding participants, with trading possible only after a long period. Therefore, software holds greater appeal for some investors due to its higher scalability.

Mark Hawtin, Investment Director at GAM, stated, “In fact, the true value of wearable technology lies in its software and the vast user base enabled by connectivity. Jawbone has already accumulated the largest sleep research database in history. This is what interests the healthcare industry, not the devices that collect the data.”

GAM Hawtin stated, “It is evident that if wearable devices such as watch straps and fashion bracelets fail to incorporate data-collection sensors and software capabilities, these discontinuous wearables are likely to be merely a passing fad.”