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MaRS Market Insights

Wearable Tech: Leveraging Canadian Innovation to Improve Health

MaRS is a member of

Authors

Hadi Salah, Industry Analyst, Life Sciences &

Healthcare, MaRS Market Intelligence

Emily MacIntosh, Market Research Analyst,

MaRS Market Intelligence

Nirusan Rajakulendran, Market Research Analyst,

MaRS Market Intelligence

To download the original report, please visit

www.marsdd.com/news-insights/mars-reports/.

For further information, please contact Hadi Salah

at [email protected].

Disclaimer: The information provided in this report

is presented in summary form, is general in nature,

current only as of the date of publication and is

provided for informational purposes only.

MaRS Discovery District, ©March 2014

Quantifying life: The rise of the Quantified Self movement 4

Wearables 5

What are wearables? 5

A brief history of wearables 6

Applications: Wearables for health 8

Table 1. Incumbents: Wearables for health 9

Health and wellness wearables: Benefits 10

Benefits to physicians and other health providers 10

Benefits to health payers 11

Benefits to patients 11

Health and wellness wearables: Shortcomings 12

Target customers 15

Market landscape: Global market for wearables 16

Market segments 17

Wearables for fitness and sports 18

Wearables for medical and health 19

Canada’s wearables startups and innovators 21

Startup profiles 22

Researchers 31

Startup challenges 33

Manufacturing 33

Value proposition 33

Design and style 33

Privacy 33

Investment snapshot 34

Investor profiles 35

The future of wearables 39

Predictive guidance 39

Multiple functionalities in a single device 39

Wearables as a platform 39

Many losers, few winners 40

Prices drop, new business models emerge 40

References 41

Table of Contents

Quantifying life: The rise of the Quantified Self movement 4

Quantified Self, also known as lifelogging,

is the use of technology to capture,

measure, track and analyze data from a

person’s daily life. The types of data that

can be captured and tracked are infinite in

number, and the data collected are unique

to the individual. For example, it could

include environmental data to understand

ideal temperatures for personal comfort,

one’s calorie intake in a day, the amount

of exercise had, or the number of tries it

took to learn a new process.

Although the inception of the Quantified Self

movement can be traced back to Gary Wolf and

Kevin Kelly of Wired Magazine who coined the

term in 2007, humans have been tracking their

activities for decades, even centuries. One example

is Benjamin Franklin who, in his autobiography

published in 1791 1, described tracking 13 personal

virtues in a daily journal and marking his progress

in 13 different charts, one for each virtue. Franklin’s

motivation in quantifying this was to monitor self-

improvement and to accomplish his ambitions.

That is what Quantified Self is all about. Tracking

ourselves enables us to understand such things as

why we gain weight, how we learn, what irritates

us and what makes us happy. This leads to greater

self-awareness, which can spur us to improve the

status quo. What has changed over time is how we

track our data. Instead of pen and paper and journal

entries, technology has rendered tracking metrics

simpler and automatic. Our repertoire of Quantified

Self tools is large and continues to grow—from

straightforward software and mobile apps to devices

such as smart scales to wearables that are continu-

ously worn by the user.

Users tend to use software tools, apps and devices

intermittently, recording data when they feel like it.

It’s an inconsistent and possibly biased approach. In

contrast, wearables have exploded onto the scene

in the last year mainly due their continuous and

automatic tracking functionality, helping Quantified

“Selfers” log their metrics with minimal effort. This

whitepaper explores wearables as an emerging

technology, with an emphasis on how it may impact

health and wellbeing.

Quantifying life: The rise of the Quantified Self movement

Wearables: What are wearables? 5

Google Glass

Lumo Back

Fitbit

Adidas miCoach

OMSignal

Wearables

Calories Burned

1,302Steps Taken

6,538

352 University Avenue | Toronto, Ontario

Body Temperature

37°Stress Level

86pts

Sleep

8.5HRS

4.0HRS

Blood Pressure

845 745

12080REM

Heart Rate

What are wearables?

Wearables are small electronic devices, often consisting of one or more sensors

and having computational capability. They are embedded into items that attach

to the body, such as a user’s head, feet, arms, wrists and waist. They can resemble

a watch, eyeglasses, clothing, contact lenses, shoes or even jewellery. Wearables

either capture data or present data. The types of data collected could be as

simple as the number of steps taken in a day or as complex as ECG or brainwave

measurements (Figure 1). For output, wearables can convey information to the

user through a variety of means, from the blinking of an LED light to a complex

display of data.

Figure 1: Incumbents: Examples of wearables, their

location on the user, and sample data collected.

A brief history of wearables 6

A brief history of wearables

Wearable computers have been around for several

decades. Two early pioneers are Georgia Tech’s

Thad Starner, and Steve Mann. Starner strongly

advocated the potential of wearable computers

while completing graduate work at MIT and later

working as a technical lead/manager on Google’s

Project Glass. Mann is often described as the

“father of wearable computing” 2 for building a

head-mounted computer device as a high-school

student in the 1970s. Mann currently researches

wearables at the University of Toronto.

Credit is also due Ed Thorpe and Claude Shannon,

who invented a cigarette pack-sized pocket computer

that was designed to predict roulette wheels in the

early 1960s 3 —one of the first wearable computers.

Later that decade, Hubert Upton, while working on

a personal project, invented eyeglasses that were

designed to aid with lip reading for hearing-impaired

individuals 4 . This exemplified the potential health

and wellness application of wearable technologies.

Since the 1970s, the miniaturization of components,

the switch to digital from analog, superior computing

power, better battery technology and capacity, the

incorporation of wireless connectivity and reduc-

tions of overall costs have resulted in an eruption

of new products entering the market. In 2014, at

the Consumer Electronics Show (CES) in Las Vegas,

wearables emerged as a top trend, with new prod-

uct announcements from most major electronics

companies, and new startups covering a plethora of

applications, with health and fitness being a key cate-

gory 5 . A brief summary of notable events related to

wearables is shown in Figure 2.

A brief history of wearables: Figure 2 7

Sources:

1960 http://www.slashgear.com/cracked-glass-why-wearables-are

the-next-security-maelstrom-04284709/

1970 http://www.media.mit.edu/wearables/lizzy/timeline.html

Ed Thorpe and Claude Shannon

invented a cigarette pack-sized

pocket computer that was

designed to predict roulette

wheels. The device was easily

concealed in a shoe.

1960s

Steve Mann developed the

“Wearable Wireless Webcam”

1990s

HP releases the HP 01

calculator watch

1970s

First generation iPhone is

released, revolutionizing

pocket computing.

2000s

Steve Mann builds the

WearComp1 – a backpack-based

system capable of displaying data

on a head-mounted micro display

and wireless communications

1980s

A plethora of consumer

wearables hit the market,

including Nike FuelBand,

Fitbit, Google Glass

2010s

1980 Mann, Steve (2013): Wearable Computing. In: Soegaard,

Mads and Dam, Rikke Friis (Eds.). The Encyclopedia of Human-Com-

puter Interaction. 2nd ed. Aarhus, Denmark: The Interaction Design

Foundation. http://www.interaction-design.org/encyclopedia/wear-

able_computing.html

1990 http://www.interaction-design.org/encyclopedia/wearable_

computing.html

Figure 2: A brief history of wearables.

Applications: Wearables for health 8

Applications: Wearables for health

Health and fitness, and other medical applications, are areas where wearables

are expected to play a transformative role. However, the application of wearable

devices has potential in any industry where hands-free data collection is highly

valued. Wearables can be generally divided based on consumer or non-consumer

applications. These two categories can be further segmented based on the

particular sector the product targets.

Wearables for health (including fitness, wellness and medical applications)

are some of the early applications that have already gained traction. Notable

examples are shown in Table 1. Their success so far is not a surprise, as they

have already shown clear benefits to the user in a number of ways.

General consumer

Fitness and sports

Fashion and apparel

Home automation and remote identification

Gaming and recreation

The consumer market segments for wearables include: 6

The non-consumer market segments include: 7

Defence and security

Enterprise and industrial

Healthcare

Table 1. Incumbents: Wearables for health 9

Product: Nike+ FuelBand, one of the best-

known fitness wearables on the market 14

Function: All-day activity tracking of calories

burned and steps taken. 15 Activity is quantified

using “Fuel”, a metric developed by Nike as

“a single, universal way to measure all kinds

of activities” 16

Price point: $150–$170 USD 17

Product: UP wristband-based fitness tracker

Function: Track steps, calories burned,

distance covered, pace, active vs. inactive

time, and sleep quantity and quality 19

Price point: $130–$150 USD

Products: Two wristbands (Force and Flex)

and two clip-on trackers (Zip and One), in

addition to a wifi-enabled smart scale (Aria).10

The Fitbit Premium service provides users

with additional training guidance and reports 11

Functions: Tracks steps, distance covered,

calories burned, floors climbed, and sleep

quantity and efficiency

Price points: $60–$130 USD 12

FitbitFounded in 2007,

headquartered

in San Francisco. 8

Raised over $96

million from VC. 9

Jawbone Founded in 2006,

headquartered

in San Francisco.

Raised $189 million

in funding, valued

at $1.5 billion. 18

Nike Founded in the US

in 1964. 13 One of the

world’s best-known

sports brands.

Table 1: Incumbents: Wearables for health

Health and wellness wearables: Benefits 10

Health and wellness wearables: Benefits

An array of potential benefits stems from the

use of wearable devices for health. These tools

can be leveraged whenever information or

communication is required, a hands-free interface

is helpful 20 and consistent monitoring is bene-

ficial. Though wearables for health have not yet

achieved broad, mainstream usage, one can

already see the many ways in which they could

benefit health providers, health payers, and

individuals.

Benefits to physicians and other

health providers

1 2 3 4 5 6 7 8 Patient data for improved services

Wearables enable patients to capture health data

that would otherwise go undocumented. This data

can be captured as the patient goes about his or her

day-to-day activities, rather than under the stress of

a medical appointment. Physicians and other health

professionals can then use this newly available data

to improve the diagnosis, treatment and management

of various illnesses, effectively increasing the quality

of the services they offer. 21

1 2 3 4 5 6 7 8 Hands-free for efficiency in sterile/aseptic

environments

The hands-free nature of many wearable devices is

beneficial to health professionals working in sterile

environments because, when worn, they preclude the

need for surface sterilization. For instance, in an op-

erating room where hand washing is required, physi-

cians and other staff can use Google Glass to continu-

ously receive information throughout surgery without

needing to use their hands. 22 Enabling multi-tasking

through hands-free information or communication

also assists these professionals by increasing work

efficiency. 23

1 2 3 4 5 6 7 8 Training and collaboration from the first-person

point of view

Wearables with video and audio capability will enable

unique new training and collaboration opportunities

for medical professionals. Users will be able to film

procedures as they are performed, creating extremely

effective first-person point-of-view medical training

materials. Additionally, wearers can connect to other

professionals, creating the opportunity for real-time

collaboration (e.g., with specialists) during procedures,

potentially improving patient outcomes.24

Health and wellness werables: Benefits 11

Benefits to health payers

1 2 3 4 5 6 7 8 Wearables as levers to improve plan members’

health (and thereby decrease costs)

Insurers and corporations are looking to wearables

as tools to improve plan members’ health and thereby

reduce costs. 25 Insurers such as California’s Blue

Shield have offered incentives such as reduced

premiums to plan members who use their specified

wearable and demonstrate improved activity. 26

Other insurers have focused on incentivizing the use

of wearables through point-based reward systems, or

cash. 27 Similarly, some corporate wellness programs

include wearables as a means of tracking daily

activity as a part of group competitions or other

motivational programs. 28 Regardless of the incen-

tives chosen, these programs demonstrate the

clear cost benefit of using wearables to improve

plan members’ health.

Benefits to patients

1 2 3 4 5 6 7 8 Improved health outcomes through sustained

motivation

It’s long been known that measurement (of both a

baseline state and progress) is a key component to

improvement. The same applies to health, with even

basic pedometers showing a measurable impact

through better health outcomes. 29 Consumers

find tracking their exercise and other health data

motivating. In a survey, 52% of wearable owners

indicated that they primarily use their devices to

stay motivated. 30 Keeping track of accomplishments

and seeing them visually represented inspires users

to continue pursuing their goals. 31 Forrester Research

found that with wearables incorporating techniques

such as gamification, social sharing and digital

coaching, it “make[s] it easier for people to go

to the gym every day.” 32


1 2 3 4 5 6 7 8 Ease of data collection

Wearables for health will likely be attractive to

individuals wishing to track their vital signs and oth-

er metrics throughout the course of their day or

particular activities. 33 The concept of Quantified

Self is gaining in popularity and wearable devices

have automated the data collection. Rather than

focusing on estimating, measuring, documenting

and calculating individual metrics at particular

points in time, users can simply put on a wristband

(or other) device. With this ease of data collection,

users can acquire more data across broader time-

frames than could be achieved manually.

1 2 3 4 5 6 7 8 Highly accessible technology

With many devices’ price points landing around

the $100 mark, wearables for health are afford-

able tools, accessible to many. 34 The declining

cost of sensors and other components, 35 combined

with economies of scale, will ensure that the price

of wearables continues to decrease as their popularity

increases.

1 2 3 4 5 6 7 8 Better care

Wearables, whether used by the patient or the

health professional, have the potential to improve

medical care. In addition to the benefits that health

professionals can leverage in the delivery of care to

patients, wearables can also benefit the wearer by

helping them better quantify their health 36 and com-

municate it to their healthcare providers. Consumers’

newfound ability to track and share their own health

data is also effectively democratizing medicine,37

allowing patients to take control and demand

better care.

Health and wellness wearables: shortcomings

Accompanying wearables’ potential benefits are some current shortcomings. As a new technology,

these tools require further refinement before they are ready for broad, mainstream adoption.

1 2 3 4 5 6 7 8 Unaddressed regulatory and policy issues

The regulatory requirements for medical devices

are well established worldwide, but new wearables

are not required to play by the same rules. Wear-

ables are designed to capture personal data and

transmit it for analysis or sharing, but little has

been established with respect to responsibility for

when that information lands in the wrong hands.

These new technologies are operating in a regula-

tory and policy grey area. 38 MIT Technology Review

has already highlighted the issue: “As everything

from glasses to watches to thermostats become

Internet-connected, those gadgets become vulnerable

to malware and other security and privacy issues.”39

As the wearables space rapidly evolves and policy

issues emerge, consumers will likely look to govern-

ment to establish roles and responsibilities relating

to matters such as privacy, security, data ownership,

and consent.


1 2 3 4 5 6 7 8 Technical difficulties

As with many new technologies, wearable devices

are facing hardware and software issues that may

hamper widespread adoption.40 The incorporation

of sensors and computing power into ever-shrinking

devices designed to be worn on the body present

physical challenges. A common concern is water-

proofing,41 since sweat or washing can introduce

damaging moisture into the wearable. Additionally,

the devices’ compact size can result in constrained

power reserves 42 or frustratingly small screens

and displays. 43 Hardware issues have already been

observed in the market: in 2011, Jawbone’s UP

product experienced circuit board problems that

impacted charging, data collection and, at times,

overall function.44

1 2 3 4 5 6 7 8 Poor data quality

While the performance and functionality of the

sensors are key factors for health and fitness

applications,45 they are of critical importance for

wearables classified as medical devices. These

products risk a recall by the U.S. Food and Drug

Administration (FDA) and/or Health Canada if they

provide inaccurate readings.46 Some wearables

currently on the market have produced noticeably

incorrect data, leading consumers to question

the utility of the devices. One product that has

generated this type of user complaint is the Nike+

FuelBand, which “undercounts or overcounts

certain types of activity.” 47 Companies must focus

on improving data quality to ensure next-generation

devices meet consumers’ expectations.

1 2 3 4 5 6 7 8 Unwillingness to deliver insights, interpretation

or coaching

Continuous tracking of one’s activities generates a

large volume of data in a short period of time. This

data only becomes valuable though once it is “stored,

managed, normalized, and interpreted”48 for (or

by) the user. Providing these insights and coaching

could, however, be interpreted as medical advice and

thus the product would enter the medical device

space. Often, consumer-focused wearables are wary

of moving into this area due to stringent industry

regulations. As a result, “the user has to do a lot of

work”49 to overcome the existing “lack of actionable

context.” 50 Many wearables continue to bypass the

development of robust guidance or coaching to avoid

being classified as a medical device, and consumers

are likely not achieving their potential because of

these business choices.

1 2 3 4 5 6 7 8 Impracticality of device designs

Growing evidence shows that up to one third of

consumers who purchase wearables stop using

the devices within six months.51 This is likely related

to the impracticality of device designs, as consumers

have expressed strong interest in how devices feel

when worn.52 The use of wearables may simply prove

too awkward and unworkable for broad adoption.

Beyond the “feel,” users are also likely concerned

about social acceptance: “wearing a screen to the

right of one’s nose may appear a little strange,” 53

and “making odd, random gestures, pointing, jabbing,

plucking, and talking [to oneself]” are not yet part of

expected social behaviour. With time, however, these

activities may become as accepted as our common-

place use of mobile phones and other technologies.55


1 2 3 4 5 6 7 8 Unfashionable designs

Though efforts are underway to counter this,

many existing wearables are not attractive devices.

ZDNet (a leader in IT news and analysis) went as

far as to call many devices “ugly” and noted that

“tech companies aren’t always the best purveyors

of fashion.”56 Other descriptors of wearable design

have included “clunky” and “dorky.” 57 Consumers

prefer products that do not look like devices, or

at least have “the design aesthetics of a company

like Apple.” 58 As Frost & Sullivan emphasized, “the

more aesthetic elements (e.g., branding, design,

and comfort) of consumer goods need to be given

serious attention if tech companies are to achieve

mainstream adoption among consumers.”59

1 2 3 4 5 6 7 8 The cost of inactivity

This drawback is directly related to the healthcare

payers’ usage of wearables. If these devices can

show an individual’s health and fitness efforts and

reward them accordingly, then the devices can also

be used for the opposite purpose. As Forrester

Research concluded, “as fitness wearables track

the activities of more and more employees,

for-profit healthcare systems will both reward

adherents to an active and healthy lifestyle ...

and punish non-adherents.” 60 Although the shift to

more personal responsibility for one’s health may

seem generally positive, it could also prove detri-

mental to those who, for one reason or another,

cannot achieve the activity benchmarks defined

by payers.

1 2 3 4 5 6 7 8 Preying upon human insecurity

Humans have survived on this planet for thousands

of years without the need for modern wearable tech-

nology. History shows that humans do not require

these tools in order to be healthy, yet consumers

are still motivated to purchase them, likely due to

worries about health and mortality. It is important

to recognize the drivers behind different wearable

applications— and to address these with the best

of intentions.

Target customers 15

Target customers

As relatively new products, wearables are generating initial interest among a select

group of consumers and health professionals. The demographics of the target consumer

are summarized in Figure 3.

Specialists and professionals

Currently, the majority of wearable devices are

consumer-targeted products. As the market matures,

it is expected that new uses will emerge for existing

devices (e.g., viewing patient vitals on Google Glass

during surgery73), and that new devices will be devel-

oped specifically for certain professions (e.g., PUSH

for sport scientists). Some potential applications

for wearables in health professions include surgical

assistance, medical training, diagnosis and patient

monitoring.74 Due to the diverse potential applications,

healthcare has become the largest non-consumer

segment for wearable technologies. 75

FUTURE DEVICE OWNERS

4% OF ONLINE

ADULTS

8 MillionUS CONSUMERS

have traits that imply they’d be interested in purchasing a wearble device for fitness61

25 to 44 years old in range

More women buying wearables

As prices decrease, income will not be a predictive factor 68

CURRENT DEVICE OWNERS

Higher household incomes than average consumers 67

Nearly equal interest from males & females64 65

Average age of 36,62 on the contrary analysts are also predicting expected future shift: Baby Boomers63

Likely to already own a smartphone.69 Open to new technology & applications70

Tom Emrich, a wearables expert and super user, puts it well: “As we see more fashion come into play, this may become one

technology that’s used more by females. A lot of [wearables] are

considered jewelry. If devices become more fashionable, it’s a

women’s market.” 66

Health status and interest:

Healthy and health-conscious 71

Unhealthy, but striving to be healthier

Regular consumer of organic or natural products & likely to exercise in spare time 72

Professional early adopters are likely to be similar in

profile to consumer early adopters: well-educated,

high-earning Gen-Xers who are open to new technol-

ogy. However, despite choices by the early adopters,

products that can provide (and scientifically demon-

strate) the most benefit in relation to cost are likely

to be the ones purchased at the institutional level in

healthcare. Adoption of certain technology by hospi-

tals, research centres or universities will ensure that

the selected devices gain a demographically broader

user base.

Figure 3: A typical target customer for wearables

Market landscape: Global market for wearables 16

2014 2018

$4.65 B

$9.17 B

$6B

$30.2 B

Figure 4: Estimated range for the

wearables market 2014-2018

Market landscape: Global market for wearables

As noted, the wearable devices market

has grown dramatically over the past few

years as advancements in electronics,

material sciences and sensor technologies

have allowed innovative startups to create

relatively inexpensive devices. Other driv-

ers, such as consumer interest in personal

health and fitness, have helped to propel

this market forward.

Consumers have responded with their wallets.

For example, Pebble has sold about 190,000 units,76

Samsung sold over 800,000 units of their Smart-

Watch in just two months,77 and Nike has sold

between one to two million FuelBands.78

The market for wearable devices is both broad and

varied. These devices range from simple wristwatches

that count calories (like the Nike Fuelband) to contin-

uous glucose monitors (like the MiniMed Paradigm®

from Medtronic) to heads up display, or HUD, mon-

itors (like SNOW2 from Recon Instruments). Manu-

facturers are developing creative ways to fit these

devices on and with the human body. This market

is poised to accelerate over the next few years as

innovative ideas come to market and consumer

interest and knowledge grows.

Initial estimates by market research firms confirm

the growing interest in this field. However, the

numbers vary as analysts work to grasp this evolving

market. For 2014, sales estimates by research firms

ranged from less than 50 million units to more than

200 million units annually.79 Looking ahead to 2018,

ABI forecasts that annual shipments will increase to

485 million units. In contrast, MarketsandMarkets,

another research firm, predicts that by 2018 the total

shipment of wearable electronic products will expand

to 134 million units.80

In terms of global revenue, market research estimates

range from $4.65 billion81 to $9.17 billion.82 Firms

varied greatly in their projections for 2018, ranging

from a conservative $6 billion 83 to an optimistic

$30.2 billion.84 (Figure 4)

Market segments 17

The wide disparity in market numbers shows that in-

dustry experts are still uncertain about the wearable

technology market. Some analysts believe that con-

sumer interest in this market is overinflated and that

it will take some time for interest to grow. JP Gown-

der, Vice President and Principal Analyst at Forrester

Research, believes that “…the wearables market is,

in fact, suffering from a bit of a hype bubble.” In his

blog, Gownder draws a comparison to the early days

of the internet, when there was a lot of early hype

although most of the expectations were only realized

after a decade or so of growth.85 In order for man-

ufacturers to translate “hype” into sales, they must

focus heavily on educating their consumer base

on the true benefit of a wearable device. A recent

survey conducted by IDC affirms a similar message

that consumers are still unsure about the true value

proposition of wearable devices.86

2014 | $9.2B

2018 | $30.2B

APPLICATIONS

GENERAL CONSUMER

$2.5B (42%)

FITNESS & SPORT

$2.4B (40%)

GAMING & REC

$623M (10%)

HOME, AUTO & REMOTE ID

$281M (5%)

FASHION & APPAREL

$110M (2%)

REGIONS

NA $2.3B (38.3%)

EU $2.0B (33.3%)

APAC $1.1B (18.3%)

ROW $525M (9%)

$6.0BCONSUMER

APPLICATIONS

HEALTHCARE

$1.1B (34%)

DEFENCE & SECURITY

$1.0B (31%)

ENTERPRISE & INDUSTRY

$1.1B (34%)

REGIONS

NA $1.5B (47%)

EU $839M (26%)

APAC $636 (20%)

ROW $220M (7%)

$3.2BNON-CONSUMER

65% 35%

APPLICATIONS

FITNESS & SPORT

$5.1B (23%)

GENERAL CONSUMER

$13.2B (60%)

GAMING & REC

$2.0B (9%)


$1.4B (6%)

FASHION & APPAREL

$395M (2%)

REGIONS

NA $7.6B (41%)

EU $6.9B (28%)

APAC $5.3B (22%)

ROW $2.3B (9%)

$22.1BCONSUMER

APPLICATIONS

HEALTHCARE

$1.1B (34%)

DEFENCE & SECURITY

$1.0B (31%)


$1.1B (34%)

REGIONS

NA $3.4B (41%)

EU $2.3B (28%)

APAC $1.8B (22%)

ROW $715M (9%)

$8.1BNON-CONSUMER

73% 27%

Market segments

Consumer applications are the largest component of the overall market. BCC Research published the most

comprehensive study on the topic, projecting the market to grow from $6 billion in 2014 to $22.1 billion in

2018. The non-consumer market accounts for the rest: $3.2 billion in 2014 and $8.1 billion in 2018 (Figure 5).

Figure 5: Market size for consumer and non-consumer

applications by application and region, 2014-2018

Wearables for fitness and sports 18

Wearables for fitness and sports

Fueled by the Quantified Self movement, wearables

for fitness and sports have captured the attention

of enthusiasts and consumers alike. Wearables for

this market sector measure data such as heart rate,

step count, calories burned, breathing rate, balance,

explosive strength, and much more. These devices

are generally simple in form and function and are

marketed towards professional and amateur athletes,

coaches, parents of athletes, and health-conscious

consumers. Customers are interested in fitness devices

like the Fitbit Flex and the Jawbone UP because

2014 | $9.2B

2018 | $30.2B

APPLICATIONS

GENERAL CONSUMER

$2.5B (42%)

FITNESS & SPORT

$2.4B (40%)

GAMING & REC

$623M (10%)


$281M (5%)

FASHION & APPAREL

$110M (2%)

REGIONS

NA $2.3B (38.3%)

EU $2.0B (33.3%)

APAC $1.1B (18.3%)

ROW $525M (9%)

$6.0BCONSUMER

APPLICATIONS

HEALTHCARE

$1.1B (34%)

DEFENCE & SECURITY

$1.0B (31%)


$1.1B (34%)

REGIONS

NA $1.5B (47%)

EU $839M (26%)

APAC $636 (20%)

ROW $220M (7%)

$3.2BNON-CONSUMER

65% 35%

APPLICATIONS

FITNESS & SPORT

$5.1B (23%)

GENERAL CONSUMER

$13.2B (60%)

GAMING & REC

$2.0B (9%)


$1.4B (6%)

FASHION & APPAREL

$395M (2%)

REGIONS

NA $7.6B (41%)

EU $6.9B (28%)

APAC $5.3B (22%)

ROW $2.3B (9%)

$22.1BCONSUMER

APPLICATIONS

HEALTHCARE

$1.1B (34%)

DEFENCE & SECURITY

$1.0B (31%)


$1.1B (34%)

REGIONS

NA $3.4B (41%)

EU $2.3B (28%)

APAC $1.8B (22%)

ROW $715M (9%)

$8.1BNON-CONSUMER

73% 27%

these tools help motivate users to realize personal

goals such as maintaining a healthy weight and get-

ting the proper amount of sleep. These devices help

consumers gain a deeper understanding of their own

body and, in the process, recognize the necessary

next steps to improve their overall health.

The fitness and sports segment is currently expe-

riencing fierce competition as companies like Nike,

Jawbone, Fitbit, Philips and Samsung battle for space.

The total market size is summarized in Figure 6.

Figure 5 (Contd): Market size for consumer and non-consumer

applications by application and region, 2014-2018


Figure 6: Market for sports and fitness wearables, 2014-2018

$2.4B20 1 4

NA 44% EU 38% APAC 11% ROW 8%

20 1 8

$5.1BNA 41% EU 36% APAC 12% ROW 11%

Wearables for medical and health

The potential applications of wearables for medical

and health purposes are vast. For the patient, a

wearable device can collect information on heart

rate, brain activity, sleep patterns, glucose levels,

blood pressure, stress levels and more. And such

a device enables better sharing of insights with

physicians and/or caregivers. For example, the

BodyGuardian Remote Monitoring System® by

Preventice® is a wearable cardiac sensor that

allows physicians to monitor patients’ biometric

signals. This FDA-approved device monitors

non-lethal arrhythmias in ambulatory patients and

delivers this information wirelessly to healthcare

professionals. 87 Wearable devices are opening the

door for physicians to oversee and deliver care

outside the clinic.

Physicians and other healthcare workers are also

experimenting with wearable technologies in their

practice. As an example, Dr. Pierre Theodore, a

lung surgeon and assistant professor of surgery at

the University of California San Francisco, is currently

using Google Glass in the operating room.88 Glass

is a wearable device with a head-mounted display

that allows users to record and view videos and images,

browse the web, and run third-party applications. Dr.

Theodore uses the device to view pre-loaded X-ray

and CT scan images while performing surgery. For

Dr. Theodore, Google Glass allows him to focus on

the patient at all times and not leave the operating

room or switch to another system in order to view

medical images. 89

Wearable devices used for medical and health

purposes are often relied upon to provide vital

information and thus assurance about accuracy and

reliability is critical. In most cases, wearables used

in a clinical setting must receive approval from a

regulatory body. These devices generally provide a

greater level of accuracy over fitness devices and

are customized to meet the needs of the healthcare

provider and patient.


Healthcare is currently the largest market segment

in the non-consumer application of wearables.

(Although by 2018, it is predicted that the enterprise

and industry market segment will take the lead. 90 )

The global healthcare market revenue for wearable

devices is estimated to reach $1.1 billion in 2014 and

grow to $2.9 billion by 2018. 91 The majority of revenue

for this market segment (as seen with fitness

devices) will come from North America (52%), fol-

lowed by Europe (26%), Asia-Pacific (16%) and the

rest of the world (7%). 92

The total market size for medical and healthcare

wearables is summarized in Figure 7.

$1.1B20 1 4

NA 52% EU 26% APAC 16% ROW 7%

20 1 8

$2.9BNA 44% EU 25% APAC 20% ROW 11%

Figure 7: Market for medical and health wearables, 2014 - 2018

Canada’s wearables startups and innovators 21

Canada’s wearables startups and innovators

In Canada, the wearable device startup and researcher

ecosystem is thriving. World-class startups have emerged

in recent years from different corners of the country,

with clients across the globe. Leaders in this industry

are profiled below.

Startup Profiles: Airo Health 22

Airo Health

Funding: Undisclosed

Number of employees: 5

Device: AIRO

Application: Nutrition, exercise, stress & sleep tracker

Body location: Wrist

Release date: Mid-2015 (expected)

Price: $199

Founders:

1 2 3 4 5 6 7 8 Naman Kumar, 25 1 2 3 4 5 6 7 8 Emmanuel DeVries, 24

Airo Health began as a University of Waterloo project

and then spun off into a startup. Leveraging the

Velocity Garage mentorship and resources, the two

founders began developing AIRO. This wearable,

described as “one band for all your health goals,”

is intended to help users manage and control the

four pillars of one’s health:

1. Quality of diet

2. Effectiveness of exercise

3. Management of stress

4. Nature of sleep

Target customer

Airo Health is targeting its first product to health-

conscious individuals between the ages of 18 and

56 who “want to live better and want to understand

what’s going on with their own bodies.”

Business model

For consumers, Airo Health is considering a “one-time

price [for the wristband] with free online services.”

Though post-procedure aftercare and other medically-

focused markets are promising, the company has noted

that the business model may need tweaking: “As soon

as you move into the healthcare space, the stake-

holders completely change. It’s almost a given that

different business models will have to be used to

traverse that territory.”

Timing

With the growing awareness of health and factors

that influence it, founder Naman Kumar feels that it’s

“the perfect time to bring out a device that essentially

gives [individuals] control over their own health.

Wearable computing is the most convenient way for

everyday folk to have access to this kind of a utility

and facility.”

Startup Profiles

Revenue: Pre-revenue

HQ: Waterloo, ON

Startup Profiles: PUSH Design Solutions Inc. 23

Toronto-based startup PUSH Design Solutions Inc.

focuses on providing professional athletes with sci-

entifically validated data so that they can maximize

their strength-training exercises. Through the use of

a wearable device and a mobile application, athletes

can track fitness metrics such as reps and sets,

force, power, balance, speed and explosive strength.

The PUSH armband allows athletes to review their

training and share their results with coaches, train-

ers and friends.

Target customer

The device is currently being marketed to professional

athletes, trainers and coaches. PUSH wants to ensure

that the product succeeds in the professional market,

and then translate what they learn from the initial

launch and scale the product for general consumers.

Challenges

One of the key challenges for PUSH was finding the

right manufacturing partner to deliver their vision.

Initially the company went overseas to find a partner—

however, due to shipping delays, communication issues

and turnaround problems, the company is now seeking

local suppliers. In our discussion with startups across

Canada, most felt that manufacturing and design were

among the greatest challenges in this market.

Startup environment

Canada is home to a number of innovative startups

that are gaining international attention. We asked

PUSH CEO, Rami Alhamad, what he thinks of this

growing interest in wearables in Canada. His opinion?

“It’s absolutely fascinating to be honest. To think that

we’re such a small country, relatively speaking, com-

pared with our neighbours down south. And we are

coming up with some of the leading wearable devices

out in the market right now!”

PUSH Design Solutions Inc.

Funding: $900,000

Number of Employees: 10-12

Device: PUSH

Application: Fitness & sports

Body location: Arm

Release date: Summer 2014 (estimated)

Price: $149.00 USD

Founders:

1 2 3 4 5 6 7 8 Rami Alhamad, 26 1 2 3 4 5 6 7 8 Mike Lovas, 33

1 2 3 4 5 6 7 8 Suresh Joshi, 29

Revenue: $150,000

HQ: Toronto, ON

Engage Biomechanics

Funding: $240,000


Device: PosturePod

Application: Medical (prevention of pressure ulcers)

Body location: Chest

Release date: Fall 2014 (estimated)

Price: Not available yet

Founders:

1 2 3 4 5 6 7 8 Andrew Eckford, 39 1 2 3 4 5 6 7 8 William H. Gage


HQ: Toronto, ON

Startup Profiles: Engage Biomechanics 24

1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8

Engage Biomechanics was founded in 2012 as a

York University spin-off. The idea for the device

stemmed from a chance conversation between two

professors (the founders) and a nurse regarding

common issues in the long-term care sector. The

wearable under development is designed to prevent

pressure ulcers, commonly known as bedsores. The

device will detect the position, posture and motion

of a bed-bound patient and will notify personnel

when proactive intervention is required. In the

future, Engage Biomechanics intends to launch

additional wearable technologies to aid in elder care,

such as devices to help prevent falls and manage

wandering.

Business model

To appeal to institutional buyers, such as hospitals

and long-term care homes, Engage Biomechanics

is considering a subscription model. “We may not

charge for the device upfront, but instead have a

monthly subscription that includes the device, the

maintenance and the SAP subscription.”

Importance of partnerships for device

development

Mirvise Najafe, VP of Operations, emphasized the

importance of strong relationships with healthcare

facilities. He notes, “We work with them hand-in-hand

to ensure integration with their systems. The part-

nerships that we build are a solid component to [our

device] being a plausible solution.”

Future of wearables

Engage Biomechanics believes that, in future, single

data sets will offer limited value and that instead the

focus will grow into “predictions of certain events,

or longer-term insights, both of which stem from an

integration of multiple data sets.”

Startup Profiles: Impakt Protective 25

In 2010, Danny Crossman and Scott Clark founded

Impakt Protective, building upon helmet-based sen-

sor technology that Crossman had developed for

the military several years earlier. The company’s

first product, Shockbox, is a miniature sensor that

is placed inside helmets. It is designed to measure

the magnitude and frequency of impacts to the

head during sports. Its companion app then alerts

the wearer if their brain has undergone an impact

that would put them at risk of concussion, prompting

them to remove themselves from play and seek

medical attention. Impakt Protective’s next wearable,

Playbox, will leverage sensors to measure sports

performance.

Target customer

The Shockbox product is aimed at team sport coach-

es, trainers, and (depending on the wearer’s age)

the player or their parents. Impakt Protective has

already had success selling their devices to organi-

zations. Crossman explains, “We’ve got whole hockey

leagues in Toronto using them. Alberta high-school

football organizations are using them. We just

signed a contract with the Moscow hockey federation

so every eight- to eighteen-year-old in Moscow playing

hockey will be wearing Shockbox.”

Challenges

Crossman points out that some Shockbox marketing

challenges stem from the fact that “traditional team

sport is fairly old-school: it’s not a technology-rich

environment.” His view is that it is likely easier to

sell to individual athletes (such as skiers, runners

and cyclists) who are more familiar with using sport

technology.

Future of wearables in sport

In the future, Impakt Protective believes certain

wearables will be required for particular sports.

Crossman notes, “Look at things like neck guards

and hockey: you have one NHL instance where

somebody got cut in the throat and now every kid in

hockey wears a neck guard. Helmet sensors for the

head impact side will be regulated. It will be a man-

datory addition.”

Founders:

1 2 3 4 5 6 7 8 Danny Crossman, 41 1 2 3 4 5 6 7 8 Scott Clark, 43

Impakt Protective Funding: $1.4 million


Device: Shockbox

Application: Sports

(detection of head impact)

Body location:

Head (helmet)

Release date: 2011

Price: $149

Device: Playbox

Application:

Sports performance

Body location:

Torso/chest

Release date:

Summer 2014

Revenue: Under $1 million

HQ: Kanata, ON

Startup Profiles: InteraXon 26

Toronto-based InteraXon is the creator of Muse:

the brain-sensing headband. Muse is a brain fitness

tool and wearable device that consists of a light-

weight headband with seven EEG sensors designed

to detect and measure brain activity, just as a heart

monitor measures heart rate. The user’s brain

activity is converted into audio and visual feedback

that is displayed on a tablet or smartphone. With

real-time information, users can understand how

their brain is functioning and adjust their mind to

achieve better results.

Target Customers

The target customers for Muse are individuals who

are looking to decrease stress and improve cognitive

function. Examples of customers include students

who are looking to do better on their exams, parents

with children who are looking to reduce stress,

executives who want to be able to perform more

effectively in the workplace and the elderly who are

hoping to improve and maintain their cognitive

function as they age.

Finding Talent

Acquiring talent is one of the most challenging

aspects of running a startup. However, for InteraXon

CEO Ariel Garten, identifying talent in Ontario was

not a problem. “Many times people have asked me,

‘Oh, why don’t you go down to (Silicon) Valley?’”

Garten explain, “And I respond with ‘no, there’s

competition for talent in (Silicon) Valley, and here

(in Ontario) we have very, very talented engineers

and some of the best machine learning groups in

the world.”

Startup Hurdles

For Ariel and her team, some of the challenges

that they faced early include identifying a manu-

facturer, managing their inventory, and community

management.

InteraXon

Funding: $7.2 million


Device(s): Muse

Application:

Health & wellbeing

Body Location: Head

Release Date: May 2014

Price: $299 USD MSRP

Revenue: Undisclosed

HQ: Toronto, ON

Founders:

1 2 3 4 5 6 7 8 Ariel Garten, 34

1 2 3 4 5 6 7 8 Trevor Coleman, 34

1 2 3 4 5 6 7 8 Chris Aimone, 35

Startup Profiles: Kiwi Wearables 27

Toronto based startup Kiwi Wearable Technologies

Ltd. focuses on solving problems for developers

and builders in the wearable technology space.

The company initially started with a development

kit that allowed developers to stream raw sensor

data in less than 2 minutes, and now has built

up an open wearable technology stack that lets

developers build applications without advanced

knowledge of embedded electronics, kinematics

or signal processing. The founding team has a blend

of experience in design, software development,

embedded systems, big data and general

management consulting.

Target Customers

The target customers for Kiwi are developers, who

are interested in prototyping, building and operating

their personalized wearable technology applications.

These individuals or organizations are familiar with

rapid prototyping, 3D printers and basic web pro-

gramming languages. In addition, Kiwi is also seeing

significant market interest from B2B players. For both

markets, Kiwi is working to ensure that a reliable and

stable product is developed and shipped quickly to

fully address their needs.

Technology

Kiwi is focused on developing open technology sys-

tems that incorporate privacy by design. The team

focuses on using existing and scalable components

to their solutions to ensure that they can be used as

further down the value chain as possible by develop-

ers. Kiwi is also building technology that blends into a

user’s daily lives by being significantly less obtrusive

than the wearable devices available today.

Developer Community

Kiwi has a rapidly growing community of early adopters,

who have purchased developer kits and provided

feedback in addition to building innovative applications

on the Kiwi platform which include 1) smoking cessation

app 2) electronic pillbox and 3) soccer free-kick appli

cation amongst others.

Kiwi Wearables



Investment: $160,000

Device: Kiwi Move

Market segment: Developers, Makers, Builders

Body location: Arm, wrist, ankle, collar & chest

Release date: July 2014

Price: $125 USD (pre-order price)

Founders:

1 2 3 4 5 6 7 8 Ali Nawab, CEO, 32 1 2 3 4 5 6 7 8 Zaki Patel, 32

1 2 3 4 5 6 7 8 Olivier Mayrand, 25 1 2 3 4 5 6 7 8 Ashley Beattie, 32

1 2 3 4 5 6 7 8 John David Chibuk, 25


HQ: Toronto, ON

Startup Profiles: Lynxio 28

1 2 3 4 5 6 7 8

Lynxio




HQ: Toronto, ON

Device: Lynxio

Application: Physiotherapy

Body location: Knee

Release date: Undisclosed

Price: Undisclosed

Founders:

1 2 3 4 5 6 7 8 Michael Vaughan, 26

Lynxio is the brainchild of Michael Vaughan, a

recent graduate from OCAD University’s Industrial

Design program. Lynxio’s vision is to create a knee

brace that will empower patients and give them a

greater sense of ability and freedom. To do this,

Vaughan is working to create a device that will

allow patients to track and record their physio-

therapy regimen and share the results with their

physiotherapist.

Challenges

Having a design background, one of Vaughan’s key

challenges as an entrepreneur is learning how to run a

business. Vaughan is actively looking for experienced

business partners. In the meantime, he is leveraging

resources at MaRS and OCAD University to launch

his business.

Passion and drive

Entrepreneurs start a business for many reasons.

For some, it is the challenge of creating something

innovative. Others see it as a business venture and

the opportunity to be financially successful. Asked

about his motivation in creating Lynxio, Vaughan

described that for him the appeal lies in “opportu-

nities to keep people safe from themselves or from

their environment, and in helping people get better

quicker and more efficiently.”

Market gaps

There is a growing interest in the wearables market,

although some gaps still need to be addressed to

enable widespread adoption. Vaughan feels that

current wearable prices are too high and that the

devices are generally targeted toward consumers

with disposable income. He noted that wearables

need to provide intrinsic value to the customer, and

that most consumers will not purchase them just

because they are new and trendy.

Startup Profiles: Carré Technologies Inc 29

Co-founders Roy and Fournier initially established

their company in 2006, intending to perform critical

analysis on health data. They quickly discovered

that the devices to collect this data did not yet

exist, so they set out to create their own wearable.

The device, Hexoskin, is a shirt with fabric-embedded

sensors, designed to be worn during a workout or

throughout the day and night. This wearable is

capable of monitoring heart rate, breathing, steps,

calories, and more through its unobtrusive textile

sensors. Hexoskin is used by the Canadian Space

Agency and has been worn by medalists at the

Sochi 2014 Winter Olympic Games.

Future of Wearables

Outside of the clinical environment, heath data is

scarce. The creators of Hexoskin want to challenge

that: “Our job is to have millions of people wearing

smart shirts for health monitoring. With this data we

will learn how to help people with their health and

prevent disease instead of just curing it” says Fournier.

Ultimately, they hope Hexoskin “Changes the way

medicine is practiced around the world.”

Carré Technologies Inc

Funding: $750,000


Device: Hexoskin

Application: Fitness, health, and sleep tracking

Body location: Torso (shirt)

Release date: 2013

Price: $399 (additional shirts are $175)

Founders

1 2 3 4 5 6 7 8 Jean-François Roy, 35

1 2 3 4 5 6 7 8 Pierre-Alexandre Fournier, 35


HQ: Montreal, QC

Current Gaps

Fournier expressed a lack of manufacturing capacity

for components and materials for wearable health

products. Despite the growing demand, Fournier be-

lieves that “there are no manufacturers that deliver the

technology at the right price with the right quality.”

Data Ownership and Use

Data collected from Hexoskin is stored on the company’s

servers, and is leveraged for research and product

improvement. The founders feel that this storage

option provides the most value to customers. However,

the company recognizes that data is still owned by

the customer because “People should have the right

to own their health information.”

Startup Profiles: OMsignal 30

Stéphane Marceau and Frederic Chanay founded

Montreal-based OMsignal in 2011. The co-founders

had each become frustrated with elements of the

health system, and were inspired to create a device

to track and improve one’s own health. As a result,

OMsignal developed a bio-sensing shirt intended to

help users become their best and healthiest selves.

The machine-washable smart apparel combines fit,

compression, moisture wicking, and odor control

into a single garment. Using the OMsignal shirt,

individuals can track heart rate, breathing, steps,

calories burned, and the unique OM index (relax-

ation/lack of stress).

Application vs. Platform Focus

OMsignal has elected to build a platform because

the founders “Want to enable this data set and the

applications surrounding it.” The company is planning

to allow developers to create their own applications

that leverage the data collected by the OMsignal shirt.

Incorporating Predictive Features

Marceau expressed that the machine learning and

algorithms needed to add predictive features to

wearables are already in existence. He said that the

difficulty in incorporating these features actually

stems from a lack of data: “The tough part is to get

the dynamic data set in the cloud by getting millions

of people continuously bio-streaming their data. The

mathematics are easy once the data set is there.”

Future of Wearables

OMsignal believes that wearables (particularly con-

nected clothing) will become ubiquitous and a base-

line expectation. Marceau envisions that wherever a

customer may shop, he or she “Won’t even ask and

the clothes will be connected to the device that helps

him or her live a fitter, healthier, happier life.”

OMsignal

Funding: $1.2M

Number of Employees: 18

Device Name: OMsignal Shirt

Application: Fitness and stress tracker

Body Location: Torso (Shirt)

Device Release Date: Mid-2014 (expected)

Device Price: Not disclosed

Founder(s):

1 2 3 4 5 6 7 8 Stéphane Marceau, 44, CEO 1 2 3 4 5 6 7 8 Frederic Chanay, 43


HQ: Montreal, QC

Researchers: Dr. Carolyn McGregor 31

Dr. Carolyn McGregor, Health Informatics Research, University of

Ontario Institute of Technology

Research focus and approach: health informatics,

intelligent clinical decision support systems, stream

computing, temporal data mining, critical care health

informatics, neonatal health informatics, cloud

computing in healthcare, patient journey modelling,

women in computing and IT.

Dr. McGregor began her career in Australia, focus-

ing on business- and finance-related information

systems. She then shifted her focus to healthcare,

establishing and growing the study of health infor-

matics at the University of Western Sydney. Since

2007, Dr. McGregor has lead health informatics

research in Canada. Her interest in wearables was

partly inspired by work on the topic of neonatal

critical care health informatics, where she encoun-

tered the problem that premature babies have

fragile skin that can be damaged by the adhesives

needed to connect monitor leads. Given their deli-

cate nature, Dr. McGregor felt that neonates could

benefit from gentler monitors that did not need to

adhere, such as wearable sensors.

Data versus information in consumer-facing

devices

Dr. McGregor believes that raw data has little value

for consumers. “Those raw physiologic signals aren’t

what I need—they don’t help me to understand how

well I am.” She explains that “one of the challenges

for a lot of these wearables is what to do with the

data so it becomes information that creates value

for the individual.”

Secondary uses of medical data from wearables

Though the public generally objects to its medical

data being sold or used by corporations, Dr. McGre-

gor asserts that other types of secondary uses are

viewed positively. Her research has confirmed that

“there’s a lot of public support for the use of the

data as long as it is for not-for-profit or research

or realization.”

Fostering innovation in wearables

Dr. McGregor highlights the need for a network con-

necting all parties involved in wearables for health.

She notes that there should be more interaction

between clinical experts and those who work on

wearable technology. In her opinion, “creating some

sort of structure that supports and offers cohesion

between the different groups” would greatly benefit

Canada’s burgeoning wearables industry.

Researchers

Researchers: Kate Hartman 32

The human body is an open canvas at the Social

Body Lab. Located at OCAD University, the goal

of the Lab is to find meaningful ways for humans

to interact with technology. Director Kate Hartman

leads a team of creative minds who tinker with

technology and create innovative wearable devices.

Hartman’s research and passion span a number of

fields and include physical computing, wearable

electronics and conceptual art.

Projects

The researchers at the Social Body Lab combine

art, design and technology to address challenges

and arrive at creative solutions. Some of the projects

focus heavily on design, while others centre on prac-

tical ways to solve common problems. The Limber,

a project that is currently underway is a system of

wearable sensors that the Lab has created to reduce

repetitive stress injury among knowledge workers.

For details on Limber and other projects the Lab

has underway, visit http://research.ocadu.ca/social

body/projects.

Device-user interactions

The Social Body Lab aims to create devices that

provide meaningful interactions. We asked Hartman

to further elaborate on this concept. “The thing that

we talk a lot about is whether technology contrib-

utes to or takes away from an interaction that you’re

having. We have this proliferation of communication

technologies, and in some ways it makes us more

distracted, and in some ways it prevents us from

really connecting with each other in a meaningful,

satisfying, multi-faceted way.” The goal of the Lab is

to investigate this idea further and find innovative

solutions to connect humans and technology in a

more meaningful way.

Future of wearables

When asked about her vision of the future of wear-

ables, Hartman responded, “I hope that by that point,

we’ll see wearables that are more integrated and

more sophisticated, and less obvious. It’s my antici-

pation and hope that we’ll look a lot like how we look

now, as opposed to some cyborg transformation. I

see wearables ultimately bending to accommodate

human interest and style rather than us going in

some really sci-fi direction.”

Kate Hartman, Social Body Lab, OCAD University

Research focus and approach:

Critical engagement with technology, interdisciplinary

practices, meaningful interactions, distribution of

knowledge, & collaboration.

Startup challenges 33

ManufacturingBusinesses in this industry are by nature hardware

companies and thus encounter challenges that

software companies do not. Most of the startups we

spoke with cited manufacturing as a difficulty. For

entrepreneurs, it is not easy to procure the many

components that go into building a device. Finding

the right manufacturer who is able to supply the

components at the appropriate specification and

quantity is sometimes the greatest challenge for an

early-stage company. Startups in this industry also

have to manage an inventory, which is often prob-

lematic due to limited working capital and uncertain

consumer interest. Additionally, manufacturing and

inventory logistics make it more complex for hard-

ware companies to pivot their business.

Design and styleThe style and aesthetics of the wearable device

affects its chances of widespread adoption by

consumers. Getting the overall look right is a major

challenge. Ultimately, consumers want a device that

is not socially awkward to wear. While the product

must have a powerful processor and have a relatively

long battery life, it cannot be intrusive and bulky to

wear. Companies need to achieve the perfect balance

between design and function.

Value propositionTo attract and retain customers, companies must

demonstrate tangible benefits. Collecting health

and fitness data has no intrinsic value unless it is

presented in a manner that the customer can under-

stand and utilize on a daily basis. As more and more

devices enter the market and competition increas-

es, selling a device that simply counts steps taken

or calories burned will no longer suffice. To remain

competitive and encourage adoption, hardware man-

ufacturers must partner with developers to release

value-add software apps that interpret and present

body metrics in a meaningful way. If wearable device

companies are not able to get developers to build apps

for their products, their device will ultimately fail.

PrivacyPrivacy and security is of paramount concern, espe-

cially with wearable devices that collect health and

medical information. The recent privacy fears related

to Google Glass have intensified this issue, and if

the industry does not respond properly, consumer

interest in wearables may diminish. Companies must

clearly communicate to their target customers who

owns the information and how the information will

be used. In addition, they must ensure appropriate

security so that devices cannot be tampered with

or hacked.

Startup challenges

The wearable devices industry faces several unique challenges and hurdles

that companies of all sizes must overcome if they wish to succeed. Through

our research and discussions with investors, university researchers and

Canadian startups, we have compiled a list of some of the key obstacles.

Investment snapshot 34

Investment snapshotGlobally in 2013, wearables startups raised about $458 million across 49

investment deals, a significantly more robust amount than in 2012, when

approximately $250 million was raised across 19 deals.93 Health wearables

comprised a significant portion of that capital, accounting for about 30%

of total money raised (or $136 million).94

WHERE DID THE DEALS TAKE PLACE?

$1.75MAVERAGE SEED/ANGEL DEAL SIZE

OF DEALS WERE

SEED/ANGEL OR SERIES A65%

$136MCAPITAL RAISED BY HEALTH & FITNESS WEARABLE STARTUPS

$8.51MAVERAGE SERIES A DEAL SIZE

San Francisco 40%

Massachusetts 13%

$458 MILLION

CAPITAL RAISED IN 2013:

80% YEAR OVER YEAR IN CAPITAL RAISED

(2012 - 2013)

30%

Figure 8: Capital raised for wearables in 2013

Investor profiles: Wearable Technologies AG 35

Investor profiles

Wearable Technologies AG

Founded: 2011

HQ: Herrsching am Ammersee, Germany

Recent investments in wearables: 4DForce GmbH,

Thimble Bioelectronics and SportsCurve GmbH

Investment stage: Early-stage companies

Partners: 1 2 3 4 5 6 7 8 Christian Stammel 1 2 3 4 5 6 7 8 Harry Strasser

Based in Germany, Wearable Technologies AG

(WT AG) is an early-stage investor in the wearable

technologies market. In addition, the firm hosts

one of the world’s leading innovation competitions

in wearable technology (Wearable Technologies

Innovation World Cup), provides strategy and tech-

nology consulting services and hosts international

conference and trade show.

Startup challenges

Florian Schumacher, a trend scout at WT AG and the

founder of Quantified Self Germany, believes that the

greatest challenge for startups in this market is that

many “underestimate the difficulties of manufac-

turing a wearable device. That’s why we’ve seen so

many startups either fail with their first generations,

their first production batch, or in estimating the

effort [needed] to get the whole production done.”

Future of wearables

Schumacher expects that over the next few years,

three separate groups of consumers will emerge in

the wearables market: a) Low-tech consumers; b)

general-purpose consumers; and c) pro-consumers.

1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8

Investor profiles: Daniel Debow 36

Daniel Debow

Co-Founded: previously founded Workbrain

and Rypple

HQ: Toronto, ON

Recent Investments in Wearables:

PUSH, Thalmic Labs, Bionym

Investment Stage: Seed

Partners: N/A

Daniel Debow is a Canadian entrepreneur and angel

investor. As an entrepreneur, Daniel co-founded

Workbrain, workforce management software, and

Rypple, a social performance management platform

– both of which were targets of acquisitions. Current-

ly, Debow is Salesforce.com’s Senior Vice President,

leading marketing for the group and re-branding

the human capital management products under the

name Work.com. As an active angel investor, Daniel

is motivated to foster the tech ecosystem in Ontario

by making many smaller seed-stage investments.

Funding a Start-up Through Pre-orders

When asked about pre-orders, Debow expressed that

they can be “An enormously smart move,” for start-

ups, particularly for those with significant hardware

production costs, such as wearables. He commented

that this appeals to him as an investor because it

“Takes away a significant amount of revenue risk.”

Social Adoption of Technologies

Discussing the adoption of new wearables, Debow

emphasized that society has greater impact on usage

than the devices’ technical capabilities. Referencing

Diffusion of Innovations, he stated, “The issue is not

just about the technological adoption, it’s the social

adoption. People need social proof, they need proof

from other individuals.” Daniel emphasized that

entrepreneurs can overcome this challenge partly

by selling to specific vertical uses.

Investor profiles: Round 13 Capital 37

Round 13 Capital

Founded: 2012

HQ: Toronto, ON

Recent Investments in Wearables: None to date

Investment Stage: Series A

Partners:

1 2 3 4 5 6 7 8 Bruce Croxon

1 2 3 4 5 6 7 8 John Eckert

1 2 3 4 5 6 7 8 Scott Pelton

Based in Toronto Ontario, Round 13, is venture

capital firm that is focused on investing in innovative

technologies in the information, communication and

entertainment (ICE) industry, and have expressed

interest in wearables. The firm is currently raising

capital and will start investing in companies later

this year.

Investment opportunities in wearables

Scott Pelton, a partner at Round 13, believes that the

market for wearables is very lucrative with potential

for growth. In terms of investment potential, devices

that are able to collect multiple health and fitness

metrics and provide some level of interpretation are

the most attractive.

Advice for Startups seeking VC funding

There are a number of things that startups in this

market can do to increase their chance of securing

VC funding. When approaching a VC, Scott advises

that startups should have a good understanding

of the size of the market, and whether they will be

manufacturing the device locally or overseas. In

addition, Scott states that companies in this market

should have a good understanding of how much

working capital is required to run the business. Scott

also believes that a perfectly executed crowdfunding

campaign can greatly help startups secure follow-

on funding from VCs and other investors.

Investor profiles: Mistral Venture Partners 38

Mistral Venture Partners is a VC firm that focuses on

investing in early stage companies in the Internet

and mobile sector. The firm is hands on and works

closely with their portfolio companies to provide

operational guidance and business expertise. Their

ongoing support and international network means

that early stage companies are able to accomplish

milestones faster and with less capital.

Startup challenges

Code Cubitt, Managing Director at Mistral Venture,

explains that one of the major challenges for start-

ups in this space is the sheer complexity of designing

a device that requires multiple fields of expertise.

Companies in this space often require experts from

diverse fields like human physiology, fashion, textile,

programming, and engineering and often it is a

challenge trying to get all of these different areas

to come together and collaborate.

Due-diligence

Cubitt emphasizes the need to have an excellent IP

strategy in place, prior to seeking funding from a VC

firm. Cubitt explains that the wearables market is

becoming incredibly competitive and crowded, and

expects to see a “wave of litigation” in the next few

years. For investors, a key component of their due

diligence is determining if there are any patents that

limit a company’s freedom to operate.

Mistral Venture Partners

Founded: 2013

HQ: Ottawa, ON (Can) and San Jose, CA (USA)

Recent Investments in Wearables: OM Signal

Investment Stage: Seed

Partners:

1 2 3 4 5 6 7 8 Code Cubitt

1 2 3 4 5 6 7 8 Mike Scanlin

1 2 3 4 5 6 7 8 Gordon Smythe

1 2 3 4 5 6 7 8 Sreedhar Natarajan

1 2 3 4 5 6 7 8 Bernie Zeisig

1 2 3 4 5 6 7 81 2 3 4 5 6 7 81 2 3 4 5 6 7 8

1 2 3 4 5 6 7 81 2 3 4 5 6 7 8

The future of wearables 39

The future of wearables

This report was researched using secondary resources and published

studies. We also interviewed more than 20 stakeholders: investors,

startups, academics and users. Secondary research reveals that

wearables have been around for years. They hold tremendous potential

to impact user’s lives in terms of their health, how they interact and

communicate, and how they accomplish tasks and track data. The

wearables market is expected to reach the billions of dollars. But

what lies ahead? The industry leaders we spoke with shared some

of their insights (outlined below).

Predictive guidance

The current state of virtually all wearables, especially

wearables for health, is that they track data and

present trends. They help you find out how you’re

doing and whether or not you’re meeting your goal—

and if you have enabled the social features, how you

stack up against your friend.

In the near future, we expect wearables to get even

smarter. Instead of tracking and displaying content

(i.e., a reactive task), wearables will be able to make

predictions and recommendations on how to improve

(i.e., a proactive task), based on data collected. These

devices will guide the user to do things differently in

order to reach a specified goal.

Multiple functionalities in a single device

Today, the majority of wearables serve a single

purpose or a number of related functions. They can

track the number of steps you take and how many

hours of sleep you slept. But if you want to use a

wearable to track your heartbeat, control a light

switch, measure your breathing, or authenticate your

identity, then you need to wear three or four devices.

That’s not an attractive proposition. We expect to see

new tools emerging that can manage a number of

user tasks.

Wearables as a platform

An increasing number of startups are exploring the

possibility of allowing developers to access their

devices and enhance their functionality. We expect

this trend to accelerate, with more startups releasing

application programming interfaces (APIs) for this

purpose. We have also seen startups create products

that are application-agnostic, built with the expectation

that the developer community will design the “killer

app” for their device.

Future of wearables 40

Many losers, few winners

If the industry conference CES 2014 was any indi-

cation, we will see hundreds of products enter the

market in the next couple of years. The majority of

these will be “me too” devices: products that do not

offer new or innovative features. They will compete

on price and design. We predict that the majority will

fail, and that only the few that offer groundbreaking

functionality will survive. The winners will be able

to induce behavioural change in users, empowering

general consumers to seamlessly move toward being

stronger, healthier and happier, and enabling doctors

to collaborate on and deliver more personalized

healthcare. Successful wearable technology will also

leverage the Internet of Things, with devices inter-

acting with their environment.

Prices drop, new business models emerge

Today, the majority of consumer wearables cost

between $80 and $300. We expect prices, along

with profit margins, to decrease. Entrepreneurs and

startups will find ways beyond selling hardware to

monetize their innovations. The massive amount of

data collected will be a source of revenue, as will

predictive and actionable guidance of that data,

perhaps delivered via an annual subscription.

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