the company behind the first consumer wearable computer

8/10/2019 The company behind the first consumer wearable computer

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The goal of wearable computing is for wearables to be like anobedient dog thats learned how to heel. A computer should be behindyou, working for you as a companion without being obtrusive. !teven !chwart", #$T #edia %abs &earable 'omputing division (

$s the computing public ready for computers to be their companions)

'ertainly, with the mass consumer use of email, *+As *ersonal +igital Assistants-

and web enabled cell phones, wearing a computer that is always on and can

accommodate your every computing need whatever the environment isnt all that far

fetched, but is the computing public ready for wearable computing) Technology

companies face a multitude of challenges that need to be addressed when promoting

a new product, but wearable technology companies face even greater obstacles to

mass market sales. &earable computing use re uires users to change their behavior

and companies need to overcome that barrier as well as educate their potential

customers about the usefulness of a technology that does not directly address an

immediate need and is not currently widely used.

!teven #ann initially developed the wearable computer in the (/01s when

the inventor was in high school- as a reality and memory enhancement device. 23

&hereas #anns goal is to enhance human memory and e4perience through

wearable computing devices, he has not been focused on making his prototype

system a product for the mass consumer market. &earable companies have been

successfully selling their product to 5ortune (111 companies for 6eld force

automation 55A- environment for more than 21 years. 7oping to e4pand their

1 Annette Cardwell, "Pret-a-Porter PCS-the Shirt on Your Back Gets a High-Tech U grade," Ziff Davis SmartBusiness for the New Econom ! #$$1% 'ann (rought his in)entions to '*T in 1++1, and is considered to (e the catal!st or the de)elo ent o the'*T .eara(le Co uting /a(orator!&0 He also (uilt the world s irst co)ert ull! unctional .earCo with dis la! and ca era concealed inordinar! e!eglasses in 1++2& His weara(le in)entions ha)e undergone nu erous odi ications o)er the!ears and as the world3s oldest c!(org his weara(le e4ui ent allows hi to )iew the real world through hisle t e!e and his right e!e sees the ro5ection o a co uter screen that dis la!s the rocessed i agesrecorded (! the ca era within the e!eglasses lens& Those rocessed i ages ha)e (een odi ied (! 'annto ilter out ad)ertising and to dis la! )arious te6t notes ne6t to o(5ects or which he would like additionalin or ation& 'ann3s .earCo also has (io etric eed(ack (uilt within the s!ste to onitor his heart rateand )ital signs and data is in ut into the s!ste )ia a )oice recognition s!ste &

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potential customer base beyond 55A, wearable companies have taken #anns

wearable computer concept and have been developing the functionality and are now

re marketing their products toward the mass consumer market versus 55A market.

&orking closely with #ann and conse uently, due to that partnership and

their vast number of intellectual patents, one of the largest of these wearable

computer companies is 8ybernaut 'orporation 89:;- based out of 5airfa4, transferable core,> which is basically a *' 'ard si"e computer

that contains all the brains and guts of a *'? +!* digital signal processor-, '*=,

memory, storage, $@ circuitry about everything e4cept the display and the

keyboard. B 'urrently with oCces in Asia, Durope, the #iddle Dast and Africa, and

revenues of E/.F million in 2111, 8ybernaut has been able to apply its research,

development and commerciali"ation of wearable technology to provide wearable

solutions around the world. 8ybernauts product sales accounted for GBH of 2111

revenues and consulting, licensing and other, 3GH. F

8ybernaut is the largest player behind wearable computing development and

diIusion and will provide a framework for discussing this new technology and the

strategies behind its development and marketing. This paper will outline the

wearable marketplace as well as the marketing, technical and policy challenges that

impact its mass consumer adoption. :y following the actions of 8ybernaut this paper

will show that strategies developed for new technology products must be developed

within the conte4t of network economics and must be focused on how to utili"e

standards, policy and patent agreements and corporate strategic partnerships in

order to gain the dominance in the market Ja necessity for the success of a product

reliant upon and impacted by network eIects and e4ternalities.

B Car en 7o(el, " The 8uture s Here 7ow -- .eara(le PCs," eWee k, 'a! #9 #$$$&2 Business&co

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+eveloping and investing in new product concepts on a corporate strategic

level re uires a level of intelligence gathering about the current market need and

acceptance attitude toward the product as well as a prediction of what the future of

the market for the product would look like. &ith wearable computing, there iscurrently a well established need and demonstrated use of the technology within 55A

and there is a young, growing market of early adopters who might be interested in

purchasing a product which combines the functionality of their cell phone, *+A and

laptop all within one system with a greater range of mobility.

The mobile computing market has been predicted as an emerging market with

e4tensive growth potential. The Kartner group has labeled the wearable computing

as one of the hot technologies that will enter the consumer market within the ne4t

ten years. Additionally, their 2111 report predicts that by 211B there will be L11

million wireless data users. &hile this 6gure encapsulates wireless users via cell

phones, laptops, and more well known wearable devices like *+As- it is still a

signi6cant number. The research 6rm further predicts that by 21(1, 01 percent for

the population in developed nations will spend (1 times longer per day interacting

with people in the Me world than in the physical one, and that by 2110, more than G1

percent of the population of the =nited states and Duropean =nion ages (F to F1 will

carry or wear a wireless computing and communications devices J and the number of

users that will rise to 0F percent by 21(1. G 7owever, as this paper shall illustrate,

even though Kartner predicts that there will be a consumer market for this product,

8ybernaut faces a variety of challenges in transforming what was initially a 55A

device into a technology useful to mass consumers.

Pilot Testing

*artially due to the infancy of 8ybernauts market, it has become essential to

pilot test their products to determine if it meets customers needs and to gauge early

: 'ichael Bartlett, "Two Gartner Studies 8oresee a .ireless 8uture," Newsbyte s, 'a! ; #$$1&

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interest in the product. *ilot testing allows 8ybernaut to address user interface issues

that may present high barriers to a potential consumer purchase. +ue to the user

interface of wearable products, there are high switching costs involved for a

customer that wants to move from a desktop computing environment to a mobilecomputing one. A signi6cant amount of training is re uired, and a modi6cation of the

software for the task at hand is re uired as well. Dach application may need to

adNust its user interface to take advantage of this platformOs mobility, speech

recognition capability, audio system and display. $t wonOt simply be enough to take

desktop applications, that take full advantage of a (13 key keyboard and a mouse,

and simply stick them on your belt. 0 $n addition, there are various movement

adNustments that need to be made in order for a desktop user to adNust to navigating

a wearable interface. $nstead of being able to move the cursor up on the screen by

moving the pointer in your hands vertically, for e4ample, the user needs to move the

pointing device in their hand forward. This represents a huge amount of learned

behavior that needs to be overcome in order to use the device.

8ybernaut has been actively pilot testing its new products within a variety of

organi"ations that could bene6t from wearable wireless technology. $n 211(, :ell

'anada announced that they would purchase 311 of 8ybernauts newest models the

#A < for their technicians to use. That purchase was largely based on the positive

feedback collected from the (/ technicians that were originally out6tted with the

technology during a small market test. L :rad 'hitty, the general manager of mobile

communications services for :ell 'anada, noticed that the devices saved the workers

an hour a day and the participants were so e4cited about the technology, we had to

literally beg trial participants to return the units. /

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8ybernauts 8yberPids was also the result of a pilot test within a speci6ed

market. $n the fall of 2111 after developing the 'apital Area 'onsortium for &earable

'omputer ;esearch, 8ybernaut decided to provide #A $< systems to 'onsortium

partners where they conducted studies of special education children using awearable computing solution. As a result of 8ybernauts success in the hio

'onventry %ocal !chool +istrict, 8ybernaut responded to market demand by

producing the 8yberkids brand, which is considered an Assistive Technology +evice

for disabled children. (1

Product Development and Enhancement

*roduct development, product research and product enhancement based on

pilot testing is essential for wearable technology companies to remain competitive.

&earable companies have large budgets for research and development and those

departments are currently focused on making the technology more Qe4ible and less

noticeable for the wearer. 8ybernaut 'orp has been able to take advantage of

#oores %aw where the processing speed doubles every 2 years- (( and have been

able to pass their increased eCciency in the manufacturing process on to their

customers through reducing the product price for new versions. Appendi4 A charts

8ybernauts products and features developed through their new versions of their

#obile Assistant. Their product improvements have been driven by technological

enhancements smaller, faster processors, etc- and customer feedback. The impact

of customer feedback is clearly illustrated in their most recent model, the * #A that

lets users check e mail, listen to music and play games while on the move. (2

1$ ar, "The =!(erkids Pro5ect," 8air a6, ?A@ =!(ernaut Cor oration%&11 'oore3s /aw as created in 1+:2 (! Gordon 'oore, the co- ounder and chie research scientist o *ntelCor oration, who suggested that the rocessing ower and s eed o an! electronic calculating de)icedou(led e)er! 19 onths, while the rice or that technolog! declined (! a(out 02 ercent e)er! !ear-re resenting e6 onential growth&*an ukes and Ted 'cCain, "/i)ing on the 8uture dge," Technology & earnin g, anuar! 1+++&1# =!(ernaut Cor , ".eara(le Co uters ro =!(ernaut Shi ing Soon," #$$#%&

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*roduct enhancements that have been made to address the technical

performance issues. 5or e4ample, the systems with $ntel chips and &indows !

operating system- run into problems. $ntel chips tend to run hot, and &indowsO icon

based interface is distracting when displayed on an eye si"e display. %inu4 is also the! of choice for !teven #ann. >The icons get in the way,> #ann said. 7is

personali"ed wearable computer runs on his & ! &ear'omp perating !ystem-,

which is based on KR= %inu4. & ! is free of applications and, so far, viruses, he said.

After months of heated customer re uests mostly from Durope-, in (/// 8ybernaut

developed a #obile Assistant that could run on %inu4 J which has inherent network

capabilities and doesnt heat up as much as &indows. (3 :attery life is also an issue

for wearable computing. 8ybernaut is researching alternatives through its partnership

with +'7 Technologies, which develops hydrogen fuel cells that are a hot swappable

battery option.

Potential Barriers to Mass Consumer Adoption

$n (//F, futurists de6ned the features holding back the wearable computing

market. Among the laundry list were high costs, coverage gaps and a plethora of

applications. (B The industry has responded to these challenges by vertically

integrating to reduce costs, and bundling devices to enhance interoperability. 9ears

later, coverage gaps and a plethora of non interoperable devices still e4ist, but fewer

applications are in the marketplace, and the players like 8ybernaut with their focus

on developing e4clusive licensing agreements in order to create a semi vertically

structured business is allowing them to gain a large portion of the wearable

computing market.

:eyond issues of interoperability, there are other variety of other issues that

plague the wearable computing market that need to be resolved before this

technology will be adopted on a broad scale. !ome of the issues are technical in

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nature and have been discovered through its pilot testing and customer feedback

letters. #any of these issues are being addressed and solved through corporate

partnerships with 6rms that have intellectual capital or resources to more eCciently

solve the problem.8ybernaut is not alone in the wearable technology market and most of its

competitors have at one point been its partners. As the industry leader, however,

8ybernaut has more years of e4perience developing and testing the technology.

Among the ranks of its competitors are $:#,


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$n addition to strategic partnerships, 8ybernaut has recently ac uired

businesses in an attempt to vertically integrate its product development process. n

April 0, 2111, 8ybernaut ac uired 8!$, a provider of enterprise management services

and software for proNects, maintenance and workQow. n April 0, 2111, 8ybernautac uired !elfware, $nc, a company focused on training e4ecutives to manage the

interaction between their thoughts and computer input. (L :y integrating its suppliers

under one organi"ational structure and is able to take advantage of economies of

scope that will increase eCciency and ultimately result in a better product for the

user.

The other issues that limit the mass adoption sales- of wearable technology

include standards and policy issues. n the technical side, a limitation on network

bandwidth when downloading from the $nternet- limits the speed and aIects the

type and uality of information that can be access by mobile technology. 'ustomers

have also e4pressed sensitivity to the si"e of the device and to its battery life. There

is room for technological improvement in speech recognition technology as well. $:#

'orporations


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failure of the network-. $n contrast, with all of the :luetooth enabled devices acting,

as routers in the network, bottlenecks created by an increase in traCc are not an

issue and total network failure does not occur. 2(

All of these wireless technologies run on the unlicensed 2.B K7" radiofre uency, which has the potential to cause transmission errors and is currently the

maNor concern for wireless standard setting bodies like the $DDD L12.(F working

group. 22 The good news is that :luetooth is uickly becoming an industry standard

and it is predicted that in 211G,:luetooth will outnumber & %AR &ireless and %ocal

Area Retworks- ten to one and there will be 23F million :luetooth enabled mobile

phones, laptops and personal digital assistants *+As-. 23

$n order to get a :luetooth enabled device to connect to the nearest &i5i

wireless- access point, wearable users can utili"e the recently developed Dmerald

terminals which allows &i5i signals and :luetooth signals which e4ist on the same

band of spectrum- to coordinate their signals to create $nternet connectivity. 2B The

mobile device connection, to a wireless and then to the wired network has not been

completely standardi"ed, however, and universal standards for that connection still

need to be developed.

Preparing the Market

:eyond managing and developing a premium product that has been adapted

to the customers needs, 8ybernaut is involved in educating the market about

wearable technologies. Rot surprisingly, seventy 6ve percent of the 6rms marketing

budget goes into building awareness of the wearables category. 2F $nitially focused on

providing mobile computing as a replacement for old 55A technologies, 8ybernaut

has been moving to promote its wearable technology within the mass consumer

market with campaigns targeted to early adopters and technology used by children

#1 oneit>& #$$## Scott 'ace, "Breaking the #&D 'H> Tra ic a ," Boar"watch -aga.in e 1D, no& 9 #$$$% Ste)e Gold, "There s


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with disabilities. &hereas their initial marketing to companies with 55A was focused

on the features and eCciencies of the technology, the company has moved to

language and marketing concepts that appeal to the early adopter market with

advertisements in &ired and ad copy that compares the potential customer with%aura 'roft, the technology enhanced female heroine in Tomb ;aider.

8ybernaut is additionally involved in various awareness building initiatives

which including providing support to a worldwide university program that encourages

wearable *' use in computer science departments at over 21 universities on 6ve

continents. 8ybernaut also sponsers various conferences including the $nternational

'onference on &earable 'omputing in order to increase interest in wearable

computing. $nitially 8ybernaut promoted its products primarily through its website

or wearable systems resellers and minimally in nuclear or industrial automation trade

publications. +uring the 2111 holiday season, however, 8ybernaut partnered with

upscale retailer 7ammacher !chlemmer in Rew 9ork, :everly 7ills and 'hicago in an

attempt to reach the early adopter consumer market. They have also unveiled

showcase spaces in two windows in *ark Ave. side of #anhattans &aldorf Asortia. 2G

$f 8ybernaut feels like it can rest in its product development eIorts for even a

second, its competitors will uickly outpace it. The wearable research that is currently

being conducted by its competitors is focused on making wearables even more

wearable. Keneral Dlectric, +A;*A +efense Advanced ;esearch *roNects Agency-,

and +upont are currently fueling millions into developing new ete4tile technology

that will merge fashion and technology with wearable computing. They are focused

on more than Nust making the technology look cool but are also interested in

making the technology light weight, physically Qe4ible, regenerative after wiring

breaks, and most importantly, washable. &earable computing of the future will allow

#: *(id&

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the user to put on a baseball cap and glasses rather than being wired into a system

that currently consists of a waist belt, glasses and mouthpiece with wires connecting

all three.

8ybernaut decision makers feel that the company is well positioned to adaptto future technological and social environments. The market for wearable computing

and related technologies has advanced dramatically in the past year,> said Ddward K.

Rewman, chairman, president and 'D for 8ybernaut.> As a result of our leadership

position and our years of e4perience in this market, we now know who the early

adopters of this technology are and can target them for near term revenue growth.

This will allow us to scale our business and increase value to stakeholders by

generating more rapidly increasing revenues without a corresponding increase in

e4penses.> 20 As long as 8ybernaut clearly keeps its potential customers in mind,

responds to their concerns and suggestions and strengthens their corporate

partnerships to guarantee the market dominance necessary for industry success,

8ybernaut will remain to be the largest player within the wearable computing realm

and in less than a decade from now, a 8yberkids backpack will be the hottest holiday

season toy.

#; "=!(ernaut


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Appendix A

Name

P r o c e s s o r

S p e e

d

H a r

d r i v e

a m

! e i g

h t

C a r

d S l o t s

" e a t u r e s

P r i c e

#A $ 2GG #7" *entium#a4

B K: (2L#7"

( S lbs. +uel *'#'$Acardbus slots

&orn on belt, voiceactivated, headmounted display

#A $$ A#+ FLG (33 #7"processor

2 K: 32 #: 2 lbs. (2ouncesheaddisplay

Type $$$ *' 'ard!lots

EB//Fbase unit-

#A $< 233 #7" *entium 3 K: 32 #: ( lb. Type $$ *' 'ard!lots

5ully e uippedversion- covershead and botharms, and adds (1in. to the waist.

!tarts atEFBL1fullye uipped?E/,011

#A < F11 #7" $ntel#obile 'eleron

2 F K: (2L 2FG#:

( lb. E3,//F

*oma 7itachi 32 bit (2L#7" ;$!'

( K:microdrives

32 #: (1.Lounces

'ompact5lash slot, (=!: port

&ireless modem E(,B//

&A$ 7itachi (2L #7" ((ounces

E2,111

(3


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Appendix B #

Partner Technology Beneft Date o Initial

Agreement Dnpointe +istribution +istributes product in Rorth

America and provides sales,marketing and technicalsupport

(//L

$:# !peechrecognitiontechnology

!peech recognitiontechnology 2L

(///

'apella'omputers

;apid Application+evelopment

Technology

!peech enabled thetechnology to allow users to

uickly assemble speechenabled Dlectronic #anuals.2/

2111

'ommunication$ntelligence'orporation

7andwritingrecognition

Allow customers to utili"edigital signatures for legallybinding e business solutions.31

/ 2111

!ony +igital*roducts

#anufactures7ardware

(//L

7ewlett *ackard +istribution*artner

+istributes product inDurope, #iddle Dast andAfrica

(//L

+'7 Technology$nc.

7ydrogen 5uelcells

Dnables user to hot swaptheir batteries J allowing thesystem to run for a total of(2 2B hours 3(

2111

7itachi 'orp &$A &earable$nternetAppliance-

#anufacture and sell theproduct to 8ybernaut forthem to market and sell it toconsumers

211(

#icrovision $nc. ;etinal !canning+isplay

Agreement to market a fullydaylight readable and seethrough virtual display 32

2112

Te4as $nstruments +igital signalprocessors

7ands free operationthrough speech recognition

211(

F This is (! no eans a co lete list, (ut rather is a de onstration o the )ariet! o artnershi s =!(ernauthas de)elo ed lectronics .eekl!& 1++++ "Ee)elo ent So tware or .eara(le Co uters," Software Worl d #1, no& 2 #$$$%&0$ "Co unications *ntelligence Cor & C*C, =!(ernaut nter Strategic Partnershi to Ad)ance -Businessthrough Bio etric *denti ication," /om0uter 1se r 19, no& 11 #$$$%&01 Bo( .oods, "=!(ernaut s .eara(le PCs to Power u -with .ater," Newsbyte s #$$$%&0# 'ichael Bruno, "=!(ernaut Shares u on ?irtual Eis la! Announce ent," Newsbyte s #$$$%&

(B


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Bi$liograph%

:artlett, #ichael. >Two Kartner !tudies 5oresee a &ireless 5uture.> Newsbytes , #ay 0

211(.

:i"ar, ;obert. >The 8yberkids *roNect.> 5airfa4, *ret a *orter *cs the !hirt on 9our :ack Kets a 7igh Tech

=pgrade.> Zi Davis Smart Business for the New Economy 211(-? B1.

'omputer =ser.>'ommunications $ntelligence 'orp. '$', 8ybernaut Dnter !trategic

*artnership to Advance D :usiness through :iometric $denti6cation.> (L, no.

(( 2111-? 0L.

+itlea, !teve. >7ow :ig a #arket for &earables.> MC Technolo y Mar!etin

"ntelli ence , August 2111, (G.

Dlectronics &eekly. >$:# #akes &earable *c #ove.> (///-? (2.

5oremski, Tom. >&ear $t.> Electronics #ee!ly (//0-? (3.

Kold, !teve. >ThereOs ;oom for :oth :luetooth and & %an.> Newsbytes 211(-.

Uoniet", Drika. >Automatic Retworks.> M"T Technolo y $eview 2112-? 21 2(.

#ace, !cott. >:reaking the 2.B Kh" TraCc Uam.> Boardwatch Ma a%ine (B, no. L

2111-? FG.

#c'ain, $an Uukes and Ted. >%iving on the 5uture Ddge.> Technolo y & 'earnin ,

Uanuary (///, 31.

Robel, 'armen. > The 5utureOs 7ere Row &earable *cs.> e#ee! , #ay 2L 2111.

!mith, ;ick. >8ybernaut #obile Assistant.> $eviews (nline , #ay L 2111.

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!ykes, ;ebecca. >8ybernaut Row 7as %inu4 perating !ystem for &earable *cs.>

Networ! #orld (///-.

!oftware &orld. >+evelopment !oftware for &earable 'omputers.> 2(, no. F 2111-?

B. Taschek, Uames. >Accessories #ake the ut6t.> Smart )artner (///-.

VVV. >There $s a Reed.> Smart )artner (///-.

&e4ler, Uoanie. >&ireless +ata &earable 'omputers from 8ybernaut !hipping !oon.>

2112-.

VVV. >8ybernaut ;educing perating D4penses by Twelve to Twenty #illion +ollars.>

2112-.

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&%$ernaut Corporation's Strateg% (or

Creating Consumer Demand (or !eara$le

Computing Products

by

Patherine &atier

#PTK 2/1 (1

*radeep ;au

April 23, 2112

3

the company behind the first consumer wearable computer

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