Wearable Technologies Spark $50 Billion Investment Frenzy

Dr Peter Harrop, Chairman, IDTechEx
- Technology - Jun 19, 2014

Wearable technologies have attracted the attention of numerous giant electronics manufacturers including the likes of Samsung, General Electric (GE), Google and even Apple as they seek for investment opportunities and the ‘next big thing’ to counter their saturating sales in mature markets.

The latter of those heavyweights has a reported $133 billion available for such a venture and Google Trends has revealed that this crop of manufacturing heavyweights are certainly not alone in their research and development.

In March 2014, Facebook announced it will buy Oculus VR, a Californian company which specialises in virtual reality headsets, for around $2 billion and now, Apple is negotiating to buy the company Beats Electronics for $3.2 billion, its biggest ever expenditure on a takeover.

Beats is not huge: it has 27 percent of the $1.8 billion US headphones business mainly because of its premium pricing. Indeed, it has 57 percent of the premium sector of that market and it also has a music streaming service, both of which can leverage existing Apple offerings in wearable electronics. 

Facebook and Apple do not talk of paybacks, calling the investments strategic, probably meaning that they are proceeding regardless. Many of these huge ‘gut feel’ investments also tick a box under newly hot topics overlapping wearable technology; namely Internet of People (IoP) or Internet of Things (IoT).

These devices are directly internet-identified now that IPv6 allows an effectively infinite number of IP addresses to be issued. IDTechEx predicts that as many as 55 billion IoP devices will be in use by 2025; many employing printed, flexible electronics and completely new components.

Recently, Google has paid a strategic $3.2 billion for the small IoT/IoP company, Nest Labs who manufactures smart thermostats and smoke and carbon dioxide detectors.

Nest hopes to earn more from selling measurement analytics than from the devices themselves. These devices detect and respond to personal needs just like most wearable technologies and compliments Google’s ongoing investment into the internal development of Google Glass, an experimental diagnostic contact lens for diabetics and a planned smart watch; all of which are actually or potentially connected wearable technologies. 

One use of Google Glass is in industry where, in February 2014, GE announced it would invest $1.5 billion into industrial internet research from 2012 to 2015.

Now, the likes of Cisco, Microsoft, IBM and Oracle are also circling with multimillion dollar opportunities signalling that the investment frenzy will continue.

Alone among the analysts, IDTechEx has anticipated all of these developments via recent reports on wearable technology while FactSet’s listing of the top 10 cash-rich companies features more than half from within the tech domain, all of whom have invested into IoP, IoT and ultimately, the benefits of wearable technologies.

Sprinkling a few billion here and there to participate does not ‘bet the shop’ for any of these companies. It is a good time to be a small business launching inspired wearable and other electronics for humans.

You may get bought for an eye watering sum of money. Alternatively, IDTechEx counsels that you do not meet the giants head on but take a look at the smaller but still substantial sector of wearable electronics for animals with an initially addressable market of 20 billion animals managed by humans.

Later, that business will add substantial wearable electronic ID, diagnostics, location and treatment for billions of endangered species.

The big boys are giving that a miss for now but will no doubt react as the trend continues to gather momentum and value. 

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