Jon Carvinzer – July 2013 1

Wearable Products

Trends & Outlook

Agenda

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1. Technology Trend Adoption 2. Marketplace Drivers / Segments 3. Usage Models 4. Design Attributes 5. Google Glass Example 6. BOM Cost and Materials 7. Patents/Trademarks 8. Impacts of the CLOUD 9. Summary 10. Q&A

Presenter’s Background

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A specialist within the Semiconductor, Software and Internet technologies industries Have designed some of the world’s best Tablets, Smartphones and PCs for companies such as Apple, Samsung, Google Amazon, Dell, hp and LG.

I specializes in the following areas: · Networking (WiFi, LTE, 4G) – Broadcom, Qualcomm, Atheros, ZTE, MediaTek · Communications (baseband, small cells, 3G/4G overlay) – Mellanox, Cavium · I/O (touch, gestures, oncell/incell, ITO) – Samsung, LG, Synaptics, Cypress, Atmel, TI · Displays – (IGZO, AMOLED, LCD/LED, Flexible) – Sharp, LG, Samsung, Sony, Corning · Server/Data Center – cloud computing, storage, big data · Speech/Voice navigation – Google, Microsoft, Nuance, Siri · CPUs (ARM, MIPs, x86) - Qualcomm, Intel, AMD, MediaTek, Imagination Technologies, nVidia, Apple, Marvell · Operating Systems (Android/Windows/iOS/Mac) – Google, Microsoft, Tizen · Storage (HDDs/SSDs, Flash/RAM) – Fusion I/O, Virident, OCZ, EMC, Seagate, WD, LSI, Micron, Sandisk, TDK, NAND · NFC/RFID – NXP Semiconductor, TI, ST Micro, Infineon · MEMS Controllers (Gyro, Accelerometer, GPS) – Invensense, ST Micro, Phillips, AMS · PC – Dell, hp, Intel, Microsoft, Best Buy, Acer, Asus, Lenovo · Battery Technologies – Inductive charging, fuel-cells, solar, alternative energy supply, Li-Ion/Li-Polymer · Accessories – tablet keyboards, cases, audio enhancers, disposable · Wearable devices – Google, Fitbit, Jawbone – *HOT* and emerging · Audio/Video controller – Cirrus, Wolfson, ATI, Imagination technologies, nVidia · Advertising – Zynga, Facebook, Yahoo, Google, Microsoft, Comcast and Yoku · Business processes – development, procurement, logistics, Bill of Materials (BOM) · Commerce – retailers, e-tailers, hybrid delivery model – Amazon, Best Buy, Walmart, Apple

Tip: Demand for wearable technology is coming on at a faster rate than typical 10-year technology cycles.

Technology Trends Tend to last Ten Years

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Courtesy: KPCB

Tip: New major technology cycles generally end up with 10x more users/devices - driven by lower prices and improved functionality

Computing Growth Drivers over Time

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Courtesy: KPCB

Tip: Wearable tech is already $3-5B market today, could hit $30-50B by 2018

Marketplace Drivers

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What will drive the fast growth towards more devices? Consider this: • There are more than 250 million installed mobile operating systems that can support

wearable technology.

• An iWatch alone could generate $10 billion a year in revenue.

• There are currently 9 smart watch makers today.

• Watches are a $56 billion market.

• Regarding retail impact, Nike, Adidas, and Under Armour have best leveraged wearable's to enhance the fitness experience and efficacy of their products.

• The health and fitness market is about $2- to $3 billion.

• By 2020, batteries are expected to be 2.2x more powerful.

Tip: No matter what you hear – only the top players (Apple, Google, Samsung, Sony, etc) can drive this category to massive volumes

Marketplace / Segments

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• Feels like we are in the early stages – but some products have been around for 20+ years! • What’s proven and has been around:

•Fitness/Wellness (clothing/activity monitors) •Healthcare/Medical (glucose monitors/patches) •Industrial/Military (hand worn terminals)

•What’s emerging and generating buzz: •Infotainment •Fashion •Watches •Glasses •HUD

Tip: 80% of this list will only generate 20% of the industry profits for wearable devices.

Marketplace / Segments

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Tip: The average is 150x per day! That you reach for your smart phone and that’s exactly part of the usage model/user experience that is driving designs of wearables.

Usage Models

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• Both of those content types, however, are relatively

well understood compared to the next big wave: sound files and data from wearable computers.

• Fitness and health data will be a huge percentage of that personal data, as more and more people realize how behavioral shifts can improve their health and how new devices can help people track those behaviors.

• 500 million photos are being uploaded and shared each day, doubling year over year as Snapchat turns into a real phenomenon. But photo-sharing is relatively mature compared to…

• Video, which is on a tear. At the moment, video growth is being spurred by short-form video sharing like Vine and Dropcam…

Tip: The higher index at night tells you that we are already “glued” to our device anyway so wearing it at specific times like that is a natural extension.

Usage Models

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Tip: Apple has 1-6 already optimized via the iOS platform. Google (not Android) has all but #4 perfected with Glass

Sensor Enabled Wearable Device Attributes

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Courtesy: MIT

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Tip: Wearable devices will offer practical, novel and fun usefulness but will also be able to influence our behavior in ways good and bad, creating ethical dilemmas for designers.

Usage Models | Unproven but being developed

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Information tethering device or purpose built application?

Bone conduction tech delivering music directly to ears - no wires!

SMART Helmet project funded by the NFL and Moto-bike industry being prototyped now - IronMan

A wearable to track concentration and sleep – sleep based wearables will be hugely profitable.

Use your footsteps to charge a device’s internal battery

Direct brain wave interaction for gaming – think next version of Xbox Kinnect…

Usage Models | Google Glass Example

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Google Glass is a personal digital assistant that you wear: • it lets you take photographs • it directs you to the bar • it points out which of your friends are there • it overlays augmented reality layers of information • it shows you where you can shop, eat, sleep, visit, drive to

It is step 1 towards a world that constantly collects, uses and exploits the data that we all are ‘generating’ every minute an all day long – like it or not!

Tip: I believe this is what will temper some of the mainstream enthusiasm for Gen 1

Tip: This is roughly $180 in BOM cost and should support a $350 sale price for Glass

Common Specifications to Expect

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It's running Android 4.0.4 - Ice Cream Sandwich It's an OMAP 4430 CPU (TI - ARM Cortex M3 CPU) 500-1GB of RAM (Elpida or Hynix) 16GB Flash (Sandisk, Micron, Samsung) 128x128 Pixel screen with Capacitive touch integrated nHD projector display (640x360 – Google only) Accelerometer (STM, Invensense) Vibration device (Bosch) Bluetooth 4.0 or Bluetooth LE (low energy spec) Airplay (Apple only) Titanium frame (Google only) 550 mAh battery (2.1 Whr) Custom case design

Tip: Rackspace found the majority of wearable tech users said it's enhanced their lives in some way. But among those hesitant to adopt it, 51 percent cited privacy as a barrier.

Who’s Patenting/Trade marking What ?

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“Biological Entity” data transmission - your body part acts as a conduit for the data to travel through, rather than beaming the information wirelessly, which makes it prone to hacking.

Patents mostly related to wrist functionality – watch style. -Wrist slap device application -Activity monitoring system patents -“Body area networks” -iO7 integration for wearables

Patents mostly related to glasses form factor and distinctive Glass usage model and features. Also patents on projecting keyboard onto a users arm.

Patent on an invisible IR beam to your Smartphone. This IR light would allow your device to display confidential information, which would appear scrambled and unreadable on the screen once the beam is redirected.

Has trademarked “Gear” and shown medical application.

Has trademarked “TOQ” as a Smart watch filing.

Has trademarked “SmartWatch 2” as 2nd gen device and has opened up the API for hacking and app development via an SDK.

Tip: You don’t just get value from connecting devices or machines, you get value from connecting data, consumer behaviors and business processes.

Impacts to the CLOUD and vice-versa

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Wearable technology and the cloud go hand in hand: • Together they provide the rich data insights that help users better manage

many aspects of their lives.

• Cloud computing is powering the wearable technology revolution. It allows the data generated by wearable devices to be captured, analyzed and made readily accessible whenever users need it

Tip: Wearables won't just complement smartphones. they will serve new purposes too.

Summary | Recap

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1. Market sizing estimates vary: • According to IMS Research, the wearables market is poised to grow from 14 million

devices shipped in 2011 to as many as 171 million units shipped by 2016. • In a more recent estimate, ABI Research pegs the wearables market at 485

million annual device shipments by 2018 – too high… • Most likely WW annual wearable device unit shipments crossing the 100 million

milestone in 2014, and reaching 300 million units five years from now.

2. Bracelets: Right now, driven by their aptness for fitness and medical uses, bracelets dominate the wearables market. Even if wearable computing doesn't go mainstream, smart bracelets will always have a place in the burgeoning industry for smart medical devices.

• Fitness and medical wearables, could account for roughly 60% of the wearables market this year, that could grow to even larger share in the future.

$149 $99

Summary | Recap

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3. Smartwatches: Like fitness bands, they are employing wireless links — invariably, Bluetooth — to link up with a smartphone. • But instead of collecting information, like most fitness bands, watches will display it. • Users will no longer have to constantly reach into their pockets for a smartphone — an

action becoming more awkward as phone screen sizes grow.

4. Eyewear: In contrast to virtual reality, augmented reality lets you see ambient information while interacting with the real world.

• The most ambitious wearable product aimed at the consumer mainstream is Google Glass. They are already familiar with augmented reality since they have experimented with print materials that are readable by smartphone applications and can create complementary ad experiences on-screen.

$180

$250 $300

Tip: Style will matter in this category and currently Martian has the lead with Apple setting the bar soon.

One more thing … People laugh at wearable devices

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Courtesy: Saturday Night Live

Tip: From Facebook, “even in San Francisco, a dude wearing Google Glass looks like a ____.”

There is a difference between ‘cool’ and ‘geeky’…

Tip: I have a short list of key players that are helping build around the ecosystem with innovations in battery, flexible PCBs & displays, materials and textures.

Any questions?

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