- Some companies, like Intel, are moving out of the wearables space, but that doesn't mean that the trend is over.
- Investors are continuing to meet with wearables companies for a few important reasons.
The wearables market appears to be in its death throes.
But industry experts I spoke to in recent weeks aren't quite ready to pull the plug on the trend. Investors are still taking meetings with wearables startups, and entrepreneurs continue to develop new hardware products.
Why? Well, it's a combination of factors.
Health and fitness seems to be the most sticky application for wearables, an IDC report found. And it has the potential to be a real business, if companies can deliver insights from the growing volume of data. And if these insights are proven to drive long-term behavior change by convincing users to walk more or eat healthier, that's the holy grail.
"I still think the data play is interesting, though it's hard to bet on hardware," said Stephen Kraus, a health investor with Bessemer Venture Partners who is continuing to meet with wearables start-ups.
Thus far, wearables makers have made money through consumer sales and enterprise contracts. But, in the future, these companies might find new revenue opportunities from other health industry stakeholders.
"Ultimately, the signal out of these devices will be large enough that it will matter to practitioners and pharmaceutical companies," Kraus predicted.
Insurance companies also remain interested, working with companies like Apple to glean whether devices such as the Apple Watch can their help with their chronic disease burden.
Kraus thinks there's a strong opportunity for wearables that are focused on target populations to address an unmet need. That would transition wearables from a "nice to have" to a "must have."
An example of that might be a start-up such as Chrono Therapeutics, which is working towards FDA approval for a wearable quit-smoking patch that is programmed to deliver nicotine at the optimal times. Or a potential new market of wearables for seniors, which could track things such as recovery from surgery or recognize voice commands to send an ambulance.
Fitbit sees this opportunity, too. It is now looking to go beyond fitness tracking by detecting a disorder called sleep apnea.
And Apple is exploring how it could build a wearable that can help diabetes patients track their blood sugar.
Others still see potential in newer, better hardware that would appeal to the next wave of consumers.
For former Under Armour executive Robin Thurston, wearables will truly take off when they become more integrated. They'd track all the important biometrics and deliver value, without being all that noticeable.
Thurston, who previously worked on the HealthBox fitness tracking system, said the next generation of wearables will be embedded into clothing.
"In the future, you won't even be able to see them," he said.