From geek to chic: Wearables meet fashion at CES

Apple Watch Sport and the Fitbit Blaze
Source: Apple; Fitbit
Apple Watch Sport and the Fitbit Blaze

More than a third of U.S. adults are obese, according to the Centers for Disease Control and Prevention. That translates to a giant potential market for companies targeting the digital health market, which remains the driving force behind the explosive growth in wearables at the Consumer Electronics Show in 2016.

Combine health-consciousness with gadget novelty and fashionability, and you have the potential for a huge new market, one in the early stages of its growth.

"We're seeing an inflection point for wearables as a new growth category. Multiple devices and vendors rushed to the market and we're now moving beyond the novelty stage to substantive growth," RBC Capital Markets analyst Mark Sue wrote in a note on Thursday.


iFit booth at CES 2016
Harriet Taylor | CNBC
iFit booth at CES 2016

The Consumer Electronics Association predicts that Americans will purchase 38 million wearables this year, with smartwatches and fitness trackers making up the majority of sales. Sales of fitness trackers are expected to grow 12 percent this year, with $1.2 billion in revenue while sales of smart watches are projected to grow 22 percent, delivering $3.7 billion in revenue.

"While Apple's Watch has had choppy success out of the gates, it has helped spearhead a major paradigm shift in the acceptance/adoption of wearables technology along with a number of other players (e.g., Samsung, Microsoft, Fitbit, Jawbone, etc.) in the space," wrote FBR analyst Dan Ives.

A great number of wearables on the showfloor featured GPS tracking, sleep and heart rate monitoring, stepcounters and greater connectivity to other devices (for example, heartbeat monitors and weight scales). While traditional watchmakers showcased smarter fashion and adventure watches. All that adds up to an even more comprehensive set of self-data for consumers. Of course, there's a chance consumer appetite for self-monitoring will fade if all these devices fail to deliver results; time will tell.

Fitbit Blaze at CES 2016
Harriet Taylor | CNBC
Fitbit Blaze at CES 2016

Apple has no official presence at CES, so it was up to Fitbit to ignite excitement in this category. The company held a press conference on Tuesday morning where it introduced the $199 Fitbit Blaze. Key features include a color touchscreen, connected GPS, multisport tracking, activity and sleep monitoring, call, text and calendar alerts, instructor-guided workouts, heart rate tracking, compatibility with a variety of platforms and up to five days of battery life.

"The Fitbit Blaze was the biggest new product announcement as the company now looks to go in the 'boxing ring' vs. Apple in this smartwatch category as the wearables space evolves," wrote Ives.

Reaction was mixed, with some analysts citing the lack of a new sensor and the look of the Blaze as disappointing, whilst others suggested it filled an important gap in the company's product portfolio and presented an attractive inexpensive alternative to the Apple Watch.

But beyond function, though, this year at CES fashion was centerstage.

Tory Burch for Fitbit
Harriet Taylor | CNBC
Tory Burch for Fitbit

"Smartwatches are fashion items, and our Key Opinion Leaders don't find the Blaze to be compelling on this dimension," wrote LEERINK analyst Steven Wardell. He concluded that although the Blaze is innovative, the updated features are not enough to drive consumers to upgrade their devices.

Others praised the Blaze's sleek design and suggested Fitbit got it right: "Whether you like it or not, the Blaze is the result of Fitbit's extensive research into what consumers want and an acknowledgement that style matters in the market for wearables," wrote Sue.

In its booth on the showfloor, Fitbit also featured an eye-catching new line of Tory Burch-designed pendants, bracelets and wristbands designed to hold the Fitbit Flex tracker. "The fusion of fashion into technology will be an important part of the widespread adoption of wearable technologies, like Fitbit products," said James Park, CEO and co-founder of Fitbit in a press release.

So-called disappearing wearables was a key theme at CES this year, with a number of big companies unveiling new products more focused on fashion-conscious consumers. Sensors were embedded in everything — from jackets, to jewelry to headphones.

Samsung's Welt, the smart belt that monitors the user's waistline with an app, is displayed at the Samsung booth at CES 2016 at the Las Vegas Convention Center on Jan. 6, 2016.
Getty Images
Samsung's Welt, the smart belt that monitors the user's waistline with an app, is displayed at the Samsung booth at CES 2016 at the Las Vegas Convention Center on Jan. 6, 2016.

Samsung's smart men's dress belt — capable of tracking a user's waistline — garnered a lot of attention, and Under Armour made big news with its biggest push yet into digital health. The $400 UA Healthbox, launched in conjunction with HTC, is a "connected fitness system," and includes a fitness band, smart scale and heartrate monitor.

"While the bundle as is may not appeal to a large number of consumers, UA's large digital health and fitness community — possibly the world's largest post its acquisitions of MapMyFitness, MyFitnessPal, and Endomondo — could create a long-term competitive advantage for UA to sell fitness wearables to health-conscious consumers," wrote Citi analyst Jeremy David in a note on Friday.

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Fossil Q54 Pilot watch at CES 2016
Harriet Taylor | CNBC
Fossil Q54 Pilot watch at CES 2016

Fossil expanded its recently launched Q line of smartwatches, with the Q Grant and Q54 Pilot. Powered by Intel, these analog watches function as activity trackers and can pair with mobile devices to deliver smartphone notifications.

"Bringing Fossil Q to market helped us identify additional opportunity, and based on the positive consumer response, we are going big this year. Our retail partners will see the power of Fossil Group's scale and consumers will see the variety of functionality, style, colors and brands they desire," Greg McKelvey, the chief strategy and digital officer for Fossil Group, said in a press release.

These new devices don't have many now-typical smartwatch features, such as notifications and controlling music — the watches do not have a digital display. The company realizes that not everyone is in the market for a full-blown smartwatch and is hoping to hit a sweet spot between traditional mechanical watches and smartwatches. The company, which recently acquired wearables maker Misfit for $260 million, plans to introduce more than 100 wearables in time for the 2016 holiday season.


Misfit Wearables Necklace
Source: Misfit Wearables
Misfit Wearables Necklace

Pet wearables also got an upgrade at the show this year. Tractive's Pet Wearables occupied a prominent location in Tech East, and drew a lot of buzz. The company's GPS-enabled device allows owners to track pets via a smartphone app.

Of course, it's far too early to know which platforms will survive and thrive. As with all hardware, persuading developers to build apps to support smart devices will be key, say analysts.

"We ultimately believe third-party applications will represent a key driver of use cases for wearables (e.g. health, fashion) which were a major focal point this week at CES, with companies racing to establish themselves as the de facto platform/standard for certain wearables categories," wrote Ives.

Tractive Pet Wearables at CES 2016
Harriet Taylor | CNBC
Tractive Pet Wearables at CES 2016