Fitbit, light-controlled clothing, Google Glass, bendable screens, armbands that detect moods, smart watches, and 3D-printed rings that operate as subway passes — everywhere you look, all signs seem to point to the mass-market potential of wearable technology.
While the wearable technology evolution has been on the electronics wish list radar screen for years, the chatter is slowly becoming reality and more real-life examples are moving from prototype to mainstream media headlines. As always, the shift to these kinds of products will have an impact on design, supply chain, and manufacturing practices.
As we've seen with many other new hot, up-and-coming technology platforms, the growth potential numbers are always eye opening.
A report released in early October estimates that the wearable electronics and technology market — which basically includes power supply, positioning and networking components, and sensing, control, display, memory, and interface components — will be worth $8.36 billion five years out, with about 130 million units shipped. This figure is up from the $2.5 billion in revenue posted in 2012 and carries with it an expected compounded annual growth rate of 17.7 percent between this year and 2018, according the MarketsandMarkets release. A Business Insider BI Intelligence report puts the number even higher. It “conservatively” forecasts a $12 billion market for wearable devices, with wrist-worn gadgets leading the charge.
We're already seeing the range of traditionally low-tech consumer product sectors being touched by wearables — eyewear, footwear, clothing, wristwatches, and exercise gear. Give it a bit more time, and undoubtedly the possibilities will multiply and extend well beyond the consumer devices currently coming to market and winning attention.
Wearable electronics in consumer applications accounted for the largest market share, with revenue crossing $2 billion in 2012, the MarketsandMarkets report shows. However, enterprise and industrial applications are predicted to grow at the highest CAGR — more than 21 percent — during the forecast period of 2013 to 2018. It's fairly easy to imagine how applications could eventually reach the healthcare/medical, automotive, and geo-sensitive construction sectors and any other field that requires information flow in a hands-free setting.
Now, let's peel back the numbers and think about this from the practical supply chain side of things. When you think about the things that have to go into making technology wearable, the list of constraints, possibilities and considerations grows exponentially longer. Designing a computer for your wrist or ankle is different from making a laptop or smartphone, but some of the processes and practices already put in place still apply here.
One of the things worth considering is the long tail effect. Product development, supply chain, and finance executives will have to decide how predicted demand will shape how their companies play in various niche markets that could require many different form factors. Sales could largely vary from one year to the next as a constant stream of new products starts flowing into the market over the next few years.
Soon, too, the bill of the materials could include fabric, graphene, 3D printers, and different kinds of piezoelectric components. It will need coordination and integration of engineering, design, software, hardware, sourcing, procurement, distribution, and logistics capabilities. It may also require significant partnerships with new suppliers who have a greater amount of expertise in wearable technology product development than an OEM may currently have in-house.
Kevin Prendeville, a managing director with Accenture's Product Lifecycle Services practice, writing in this Wearable Tech World blog, points out another obvious area that will have to be addressed: better management of product lifecycles. This, of course, requires some heavy lifting, namely in understanding how your current PLM system works today, how it can be unified into a single enterprise roadmap, and how different internal and external teams can more effectively use PLM to address a wearable technology trend that is on the brink of bigness.
How is your company preparing for this new big thing and its long tail?