Interviewee: May Lee, Electronics Sourcing Expert, Exmovere Holdings Inc. (Shenzhen)

What is your view on the wearable technology, especially smartwatches? How do you see the wearable market evolving over the next 5 years?

May: Everybody is talking about wearables. Not many products provide the desired value proposition to consumers. You can say that these smart devices are not that smart. From the beginning of this year, many companies in China, specifically in Shenzhen, have been launching smartwatches. By March and April, over 100 different models of smartwatches will be available in the local market. This is because there are many OEMs and ODMs here. I can say most of them are far from good, and only small part of them can survive the competition.

Basically, 2013 to 2015 is the exploration period, 2015~2017 will be the adjustment period, and after 2017, it will step into a much more mature period.  By then, we can expect some amazing products with reasonable price tags.

Apart from the fact that these devices are not that smart in terms of functionality as the hype around them suggests, what other challenges do you think are limiting the growth of the market?

May: So far, even though there are many companies in the market, I don’t find many useful smartwatches. What I mean here is that even if the idea is explosive, the practical implementation is not as expected. Form factor also is a key challenge as the bulky size of the device is not desirable.

Wrist bands face competition from smartwatches since many users see the wrist bands as transitional products. Also, by being a companion to smartphones and other computing devices they need to be upgraded in terms of accuracy and reliability.

Another challenge for all wearable manufactures is to pay more attention to their product lifecycle management. Right from product design and production to marketing and services, manufacturers need to control the cost and quantity of their products.  They must know the right time to enter the market. Consumers anticipate the commercialization of a product, which, if delayed, loses the attention of consumers.

The last challenge, in my opinion, is that end-users are not using these devices for long durations.  Most of them will probably get rid of these gadgets in 6 months. It's just wishful thinking that users will use the products very often. Not all people are willing to pay the bills for health this way, and it will take some time to completely make consumers aware and cultivate new habits.

How do you think these challenges can be addressed?

May: In 2014, especially for smartwatches, more turnkey solutions will be ready from companies like STMicroelectronics, Texas Instruments, and Freescale Semiconductors. Also these companies are focusing on providing components for lower power consumption and better display, design, user experience and speech recognition technology.

Hopefully, we are going to see some good products in the near future. We’ll also get to see where the market might go next.

How is the market for smart textile in China?

May: Biosensors are increasingly being integrated into clothing, shoes and other accessories which analyze how your body is performing and tracks your daily activities. There are also several apps that are being developed to provide health solutions for the users as per the data collected. There are just few companies in the local market doing business in this product line. Maybe in the future, development will accelerate as demand grows.

What are the recent products launches in China?

May: Industry titans are competing in the wearable technology battlefield for everything, including mobile Wi-Fi, smarter router, smart TV, smartmedix box, in the connecting worlds and for smarthomes.  They are continuously making moves to build a stronger customer base. Companies like 360, Baidu Inc, and Xiaomi have been the active companies in the Chinese wearable market.

 Is there any key initiative from the Chinese government, enabling or challenging the growth of wearable market?

May: So far, there are no policies as such. Using smartwatches and wrist bands won’t be a problem. However, if those devices come with functions like blood pressure or heart rate monitor, how they are connected will be regulated by the government soon.  So far, there are no specifics.

BIS Research has recently published two studies covering the wearable product and components market.