Compnay Reports

ChangeWave Research: Wearable Technology Trends February 2015

Consumer Wearable Technology Trends Considerable Demand for Wearables But Security Remains a Concern

Jean Crumrine and Lusy Lisyanova

Overview: The excitement surrounding wearable devices remains high, with the widely anticipated Apple Watch expected to shake-up the industry upon its release.

A January ChangeWave survey of 1,145 respondents focused on the latest trends in the wearable technology market, including current ownership, future demand and consumer impressions about the security of personal information on wearable devices. ChangeWave Research is a service of 451 Research.

Current Ownership of Wearable Devices

The survey looked at current ownership trends and the types of devices consumers are already using, and a total of 14.1% of respondents say they currently own a wearable technology device.

Among this group, Health and Fitness Monitor (88%) is by far the leading type of device, followed by Smart Watch (16%).

Focusing on those who own a health and fitness monitor, two-thirds (65%) say they have a FitBit. Tied for a distant second place are Nike (7%), Garmin (7%), and Jawbone (7%).

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information. It may not be copied or distributed without permission. ©2015 451 Research, LLC. All rights reserved. ChangeWave Research: Wearable Technology Trends Future Wearable Tech Demand

Importantly, the survey shows considerable future demand for wearables, with 17% of respondents saying they plan on buying a wearable technology device in the future.

Health and Fitness Monitor (53%) again tops the list in terms of the type of wearable device consumers plan on buying, with Smart Watch (51%) ranking a very close second.

As we’ve seen in previous ChangeWave surveys, there is a great deal of overlapping interest for these two categories. A third (32%) of those planning to buy a Smart Watch also indicate they’ll purchase a Health and Fitness Monitor. Similarly, 30% of planned Health and Fitness Monitor purchasers also say they’ll buy a Smart Watch.

Smart Glasses (8%) is a distant third in terms of planned buying. We note that Google recently shelved their Google Glass product for consumers, but a new version of the wearable will likely be released in the future.

Focusing on the top two wearable technology areas, we asked respondents which manufacturer they’re most likely to purchase from:

Health and Fitness Monitor. FitBit (32%) is the leading brand among consumers planning to purchase a Health and Fitness Monitor. Jawbone (8%) ranks second, and Microsoft (6%) – a new entrant with its recently released Band – isn’t far behind. We note that two-in-five (40%) say they don’t yet know which manufacturer they’ll buy from.

Smart Watch. As the April Apple Watch launch draws closer, our survey shows Apple (76%) is the overwhelming number one choice among planned Smart Watch buyers. Samsung (3%) is a distant second in terms of future consumer demand.

We asked planned buyers about the features most important to them when deciding which smart watch to purchase.

Consistent with what we’ve seen for other electronic devices, Long Battery Life (65%) is the most important feature for planned smart watch buyers. But in a finding that shows it’s not just about function with wearables, Aesthetics/Design (44%) ranks as the second biggest consideration, followed by Wireless Connectivity (43%) and Health/Fitness Monitoring (42%).

Security Concerns with Wearable Technology

One factor often cited as hindering consumer adoption of wearables is security. To find out how much of an issue this is, we asked consumers about concerns regarding the safety and privacy of their personal information when it comes to wearable devices.

A total of 28% of all respondents say they’re Very Concerned about safety and privacy on wearable devices, and another 36% say Somewhat Concerned.

How concerned are you about the safety and privacy of your personal information when it comes to wearable technology devices?

Current Survey Jan ‘15 Very Concerned 28% Somewhat Concerned 36% Not Very Concerned 17% Not At All Concerned 5% Don’t Know 13%

Clearly, this is a significant hurdle that wearable technology companies will have to continue to address.

We took a closer look at security concerns among current wearable owners, planned buyers, and those who don’t own/don’t plan to buy. Not surprisingly, respondents who already own a wearable technology device are less likely to say they’re Very Concerned (16%) about the safety and privacy of their personal information than either planned buyers (22%) or those who don’t own/don’t plan to buy (32%).

Concerns About Safety and Privacy of Personal Information

Current Planned Don’t Own/ Wearable Wearable Don’t Plan Owners Buyers to Buy Very Concerned 16% 22% 32% Somewhat Concerned 38% 47% 33% Not Very Concerned 30% 26% 13% Not At All Concerned 10% 4% 5% Don’t Know 5% 2% 17%

Bottom Line. ChangeWave’s latest survey shows considerable future demand for wearable technology devices.

Health and fitness monitors are the most popular type of wearable device consumers own, with FitBit the clear leader. But with all eyes focused on the impending Apple Watch release, the survey points to a surge of demand for smart watch devices going forward, along with continued strength for health and fitness monitors.

Long Battery Life is the most important feature for planned smart watch buyers, but in a telling sign that shows interest in wearable devices is more than purely functional, Aesthetics/Design ranks as the next biggest consideration. This is a key difference from the early stages of other transformational mobile products such as smart phones and tablets.

Despite the excitement around wearables, concerns about the safety and privacy of personal information on these devices is an issue for many consumers. Current owners are less wary than either planned buyers or those who don’t own/don’t plan to buy, but even current owners have their concerns – raising the question as to whether the safety and privacy of personal info will hinder growth of the wearable technology industry.

It remains to be seen whether wearables become the next revolution in mobile devices – following in the footsteps of smart phones and tablets – but we’ll be keeping our finger on the pulse as the market develops.

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information. It may not be copied or distributed without permission. ©2015 451 Research, LLC. All rights reserved. 4 ChangeWave Research: Wearable Technology Trends Summary of Key Findings

Health and Fitness Excitement for Apple Most Important Monitor is Top Type Watch Drives Surge Features When  of Wearable Device in Smart Watch Buying Smart Watch

Demand  Long Battery Life (65%) Types of Wearables  Aesthetics/Design (44%) Consumers Own Future Buying Plans  Wireless Connectivity (43% )

 Health and Fitness Monitor  17% say they plan on buying  Health/Fitness Monitoring

(88%) a wearable device in the (42%)

 Smart Watch (16%) future  Smart Footwear (3%) Wearable Device

 Smart Clothing (1%) Types of Planned Wearable Security Concerns  Smart Glasses (0%) Device Purchases  28% of all respondents say  Health and Fitness Monitor they’re Very Concerned Top Health and Fitness (53%) about safety and privacy of Monitor Manufacturers  Smart Watch(51%)  FitBit (65%) personal information on  Smart Glasses (8%) wearable tech devices, and  Nike (7%) 36% Somewhat Concerned  Garmin (7%) Manufacturer Preferences:  Current wearable owners  Jawbone (7%) Health and Fitness Monitor are less likely to say they’re  FitBit (32%) Very Concerned (16%) than  Jawbone (8%) either planned buyers (22%)  Microsoft (6%) or those who don’t own/don’t plan to buy (32%) Smart Watch  Apple (76%)  Samsung (3%)

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information. It may not be copied or distributed without permission. ©2015 451 Research, LLC. All rights reserved. 5 ChangeWave Research: Wearable Technology Trends Table of Contents

Summary of Key Findings ...... 5

The Findings ...... 7

(A) Current Ownership of Wearable Devices ...... 7

(B) Future Wearable Tech Demand ...... 9

ChangeWave Research Methodology...... 14

About ChangeWave Research ...... 14

About 451 Research ...... 14

The Findings

Introduction. The excitement surrounding wearable devices remains high, with the widely anticipated Apple Watch expected to shake-up the industry upon its release.

(A) Current Ownership of Wearable Devices

The survey looked at current ownership trends and the types of devices consumers are already using, and a total of 14.1% of respondents say they currently own a wearable technology device.

Among this group, Health and Fitness Monitor (88%) is by far the leading type of device, followed by Smart Watch (16%).

Wearable technologies - such as health and fitness monitors, smart watches or glasses - can be used for a variety of purposes including personal health monitoring, phone calls/texts, and easy access to mobile apps.

Which of the following wearable technology devices - if any - do you currently own? (Check All That Apply)

Current Survey Jan ‘15 Health and Fitness Monitors 88% Smart Watch 16% Smart Footwear 3% Smart Clothing (e.g., embedded 1% with sensors/control devices) Smart Glasses 0%

Focusing on those who own a health and fitness monitor, two-thirds (65%) say they have a FitBit. Tied for a distant second place are Nike (7%), Garmin (7%), and Jawbone (7%).

Please tell us which specific health and fitness monitor device(s) you own.

Current Survey Jan ‘15 FitBit 65% Nike 7% Garmin 7% Jawbone 7% Polar 2% Other 13%

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information. It may not be copied or distributed without permission. ©2015 451 Research, LLC. All rights reserved. 8 ChangeWave Research: Wearable Technology Trends (B) Future Wearable Tech Demand

Importantly, the survey shows considerable future demand for wearables, with 17% of respondents saying they plan on buying a wearable technology device in the future.

Looking ahead, are you planning on buying a wearable technology device in the future?

Current Survey Jan ‘15 Yes 17% No 83%

Health and Fitness Monitor (53%) again tops the list in terms of the type of wearable device consumers plan on buying, with Smart Watch (51%) ranking a very close second.

For those buying a wearable device in the future, which of the following wearable technology devices do you plan on buying? (Check All That Apply)

Current Survey Jan ‘15 Health and Fitness Monitors 53% Smart Watch 51% Smart Glasses 8% Smart Clothing (e.g., embedded 5% with sensors/control devices) Smart Footwear 4% Don't Know 8% Other 1%

Focusing on the top two wearable technology areas, we asked respondents which manufacturer they’re most likely to purchase from:

Health and Fitness Monitor

FitBit (32%) is the leading brand among consumers planning to purchase a Health and Fitness Monitor. Jawbone (8%) ranks second, and Microsoft (6%) – a new entrant with its recently released Band – isn’t far behind. We note that two-in-five (40%) say they don’t yet know which manufacturer they’ll buy from.

Who is the manufacturer of the Health and Fitness Monitor you plan on buying?

Current Survey Jan ‘15 FitBit (e.g., Flex) 32% Jawbone (e.g., Up24) 8% Microsoft (e.g., Band) 6% Fitbug (e.g., Orb) 3% Garmin (e.g., Vivosmart) 3% Nike (e.g., Nike+ Fuelband) 2% Polar (e.g., Loop) 1% Samsung (e.g., Simband) 1% Basis (e.g., Peak) 0% Don’t Know 40% Other 3%

Smart Watch

As the April Apple Watch launch draws closer, our survey shows Apple (76%) is the overwhelming number one choice among planned Smart Watch buyers. Samsung (3%) is a distant second in terms of future consumer demand.

Who is the manufacturer of the Smart Watch you plan on buying?

Current Survey Jan ‘15 Apple (e.g., Apple Watch) 76% Samsung (e.g. Galaxy Gear, Gear Live, Gear S) 3% Opening Ceremony (e.g., MICA powered by Intel) 1% Sony (e.g., SmartWatch 3) 1% Asus (e.g., ZenWatch) 0% HTC (e.g., One Wear) 0% LG (e.g., G Watch, G Watch R) 0% MetaWatch (e.g., M1, Frame) 0% Motorola (e.g., MOTOACTV, Moto 360) 0% Neptune (e.g., Pine) 0% Pebble (e.g., Steel) 0% Don't Know 18% Other 1%

We asked planned buyers about the features most important to them when deciding which smart watch to purchase.

For those who plan on purchasing a Smart Watch, which of the following features are most important in your purchase decision? (Choose No More Than Four)

Current Survey Jan ‘15 Long Battery Life 65% Aesthetics/Design 44% Wireless Connectivity (e.g., Bluetooth, Wi-Fi) 43% Health/Fitness Monitoring 42% Cost 24% Compatibility with My Other Devices 22% Making/Receiving Phone Calls 21% GPS Navigation 21% Sending/Receiving Text Messages 15% Size 11% Making Mobile Payments 10% Digital Assistant (e.g., Siri, Google Now) 8% Listening to Music 7% Calendar/Scheduling Features 7% Sending/Receiving Email 7% Getting News/Weather 3% Other 3%

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information. It may not be copied or distributed without permission. ©2015 451 Research, LLC. All rights reserved. 12 ChangeWave Research: Wearable Technology Trends (C) Security Concerns with Wearable Technology

A total of 28% of all respondents say they’re Very Concerned about safety and privacy on wearable devices, and another 36% say Somewhat Concerned.

How concerned are you about the safety and privacy of your personal information when it comes to wearable technology devices?

Current Survey Jan ‘15 Very Concerned 28% Somewhat Concerned 36% Not Very Concerned 17% Not At All Concerned 5% Don’t Know 13%

Clearly, this is a significant hurdle that wearable technology companies will have to continue to address.

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information. It may not be copied or distributed without permission. ©2015 451 Research, LLC. All rights reserved. 13 ChangeWave Research: Wearable Technology Trends ChangeWave Research Methodology

This report presents the findings of a January 5-21, 2015 ChangeWave consumer survey on Wearable Technology Devices. A total of 1,145 respondents participated in the survey.

ChangeWave's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members of its research network.

The business and investment intelligence provided by ChangeWave provides a real-time view of companies, technologies, and consumer and business trends in key market sectors, along with an in-depth perspective of the macro economy – well in advance of other available sources.

About ChangeWave Research

ChangeWave Research, a service of 451 Research, is a survey research firm that identifies and quantifies change in corporate buying & business trends, telecom trends, and consumer spending & electronics trends.

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

ChangeWave delivers its products and services on the Web at www.ChangeWaveResearch.com.

451 Research, LLC, including its ChangeWave Research service, does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.

About 451 Research

451 Research, a division of The 451 Group, is a leading global analyst and data company focused on the business of enterprise IT innovation. Clients of 451 Research – at end-user, service-provider, vendor, and investor organizations – rely on 451 Research’s insight through a range of syndicated research and advisory services to support both strategic and tactical decision-making. For additional information on 451 Research, go to: 451research.com.

For More Information:

ChangeWave Research Telephone: 301-250-2363 7101 Wisconsin Ave. Fax: 240-200-3988 Suite 1301 www.ChangeWaveResearch.com Bethesda, MD 20814 [email protected]