white paper are wearables here to stay? · conjures up images of floating cars and holograms, ......

White Paper

Are wearables here to stay?

Customer Journey Analytics

Wearables are so new that most people don’t even know what to think of them. Are they a fleeting fad with a short lifespan or a broader trend that reflects a shift in how we connect with others and ourselves? While to some, such futuristic technology conjures up images of floating cars and holograms, the reality is that these products are becoming part of everyday life in 2015.

Wearables are challenging how we perceive the world around us and how we interact with our

environment. Google was the first challenger to market, releasing its wearable headset, Google Glass,

in 2014. The completely new and innovative nature of this product generated high levels of excitement

and interest, even though Google decided to shutter version 1 earlier this year. Since then there has

been a remarkable explosion in this product category with Samsung, Pebble, Microsoft and other

brands coming to market, each similar yet different in their specialties and features. It remains to be

seen whether this new crop of wearables will make a lasting impression on the wrists and in the minds

of consumers.

White Paper | Are wearables here to stay? 2

While enthusiasm for wearables continues to grow, the question of what makes for a successful wearable remains unanswered. Do companies even know what a successful wearable is? And in the months leading up to launch, are there key success indicators brands can actively monitor and adjust to ensure greater impact?

To answer this, we tapped into the largest dataset available – social data. We analyzed this dataset using our proprietary social-based scoring system, called Customer Journey Analytics (CJA) combined with natural language processing and topic segmentation, we assessed pre-launch performance for four prominent wearable products: Apple Watch, Google Glass, Microsoft Band and Samsung Gear S. What drives or dissuades consumers from purchasing these types of devices? And most importantly, are wearables here to stay?

The wearables landscape With devices boasting phone interconnectivity and specialisms in areas like fitness and health tracking, the wearables market is not short on selection. From fitness-specialized trackers like Microsoft Band and FitBit that help measure consumers’ activity levels and health, to devices that play a greater role in connecting you across your devices, consumers have a lot to consider when looking to purchase a wearable device. Wearables provide convenient access to health and personal data, step tracking and even sleep tracking. Others incorporate notifications from smartphones acting as either an extension to these devices or a standalone product.

While the wearables market is certainly growing, there is a notable trend in the frequency with which people use fitness-specialized devices over time. It’s common for consumers to be heavy users during the first three to six months of ownership and during this honeymoon period, many report that a fitness wearable is fun and exciting. These devices provide so much interesting data! But after several months of continuous use1, the data no longer reveals interesting stats as consumers develop an intuitive understanding of their key biometrics. While fitness trackers have so far proven to lose interest in the short-term, the same statistics haven’t yet been made available for other wearable devices.

Yet even though some types of wearables have not caught on long-term with consumers, the broader wearables market is beginning to shape out. In our wearables study, we identified five key themes driving interest and purchase intent: apps, product design, features, price and battery life. Let’s take a closer look at each theme to understand how each uniquely drives consumer perceptions of the market during the pre-launch phase.

MethodologySDL Customer Journey Analytics looks at how people talk about products and brands to accurately identify their path to purchase and overall levels of commitment. We also use natural language processing combined with Latent Dirichlet Association to determine themes in the wearables dataset. Crucially, the process uses probability distributions to determine strength of topics of conversation, not just volume.

1 www.smartphonehc.com/2014/05/21/decline-of-health-and-fitness-tracker-usage/


27%

22%

27%

10%14%

There’s an app for that

Don’t make me

plug in

Make me look good

Should I wait for

version two?

Of course price

matters... or does it?

1

2

3

4

5

Will these adoption trends continue throughout the

wearables market, or will new,

rich features make all types of wearables

indispensable devices?


“I can’t wait for millions of flashlight apps for the watch ;-).”

MacRumours Forum

There’s an app for thatFor wearable smartwatches, apps are a huge point of contention for consumers. Think about it – while a Windows PC and the iPhone originally launched with limited apps and software, that application base has exploded. In 2015, people expect a high level of utility from their devices. Apple emphasized the availability of Apple Watch apps ready for use at its September 2014 event, calling attention to the WatchKit (launched in November 2014) for developers. Most consumers responded well to the news and came up with other app ideas for their wrists. Developers were excited to create native Apple Watch apps, namely for the opportunity to sell to a huge user base.

Consumers were also excited at the promise of Google Glass. The Play Music app for Google Glass generated considerable excitement from consumers in November 2013 2. Up until December 2013, Google Glass was only controllable via Android devices, and with the launch of an iOS app, Google broadened the prospective user base for the device. Help consumers adopt your wearable device by ensuring a variety of apps and compatibility options are available.

With Google Glass’s Explorer program, many users received a beta of the device prior to its public debut. Some of these early adopters reviewed augmented reality (AR) applications for the device and were anxious to see what applications, AR or not, would be developed in the future 3. Samsung Gear S conversations meanwhile, skewed negative in terms of app development and support, with some consumers questioning whether or not the device would have apps ready for launch.

2 http://www.computerworld.com/article/2485884/personal-technology/ok--google-glass--play-music-for-users.html3 http://www.ereviewguide.com/news/2013/11/01/whats-next-for-google-glass/

“I would like to see some apps designed with news junkies in mind. Because of the small size of the screen that will likely mean radio and short videos. Message apps that provide brief summaries of breaking news stories would also be welcome on the Apple Watch.”

Wall Street Journal blog

27%

1

Consumers are skeptical of whether

certain wearable devices will have applications

that will enhance their daily lives, rather than being just a tech accessory.

1


“They’re putting Siri on the new Apple Watch so finally you can feel like a secret agent talking into your sleeve.”

Twitter post

“Meh. I’ll wait for Google Glass 2.0. I am 99% sure that their R&D department knows that one of Google Glass’ current flaws is that it looks sort of awkward compared to what we are used to”

Reddit comment

4 http://www.vogue.com/4589937/google-glass-apple-watch-wearable-tech-ask-lynn/

Make me look goodWearables, by name and in nature, are a very visible device for consumers. Whether the device is worn on the wrist, the head or elsewhere, people want their accessories to match their personal sense of style 4. For some, it’s a fun, colorful Gear S wristband, for others it’s a slick Apple Watch band. Core to Apple is a fierce focus on design and Apple customers expect no less – especially from the Apple Watch. They highly value the look of their device with specific requests for “stainless steel”, “gold” and “sport” in the models they wish to buy. Apple is positioning Apple Watch as a fashion symbol, working with Vogue Magazine to feature Apple Watch and Jony Ive, following Google who also worked with Vogue Magazine for Google Glass a few years back. Brands are positioning wearables as fashion statements, but will consumers agree?

Consumers want a device that will fit their wrist and their style – a “one-size-fits-all” approach will not work for wearables. Many consumers debated the Gear S’s design, some finding it too big and others finding it just right – consumers are quick to decide what size wearable they want to purchase. They want a wearable that pairs comfort and fit with style and taste, especially if they are going to be wearing it 24/7. Some will want a device with a strong tech feel, while others will want the device to blend in. Wearables raise the bar for consumers as their concerns for comfort and design are brought to a whole new level.

This lack of customization from Google Glass is part of what drove some consumers away. By offering one style and polarizing for many, consumers had no choice in what they were going to wear on their head. However, this design facet didn’t deter everyone, as its utility outshone any design limitations for some Explorers. If wearables are going to succeed in the market, devices need to be customizable for consumers in order to match each unique consumer’s style. At the end of the day, the devices need to be an extension of the user. Upon launch and beyond, the wearable that addresses function and seamless extension will be most successful in capturing the hearts (and wrists) of users.

22%

2

2


“...If I’m wrong, and Apple Watch’s

computational hardware is in fact only slightly ahead of

existing smartwatches, and that WatchKit is really just a glorified notification display system for iPhone apps, then Apple is in

deep trouble.”

Daringfireball.net

Should I wait for version two?

Even with all of the wearables now on the market, some people still aren’t sold on the concept. As various wearables come to market, consumers are increasingly challenged to determine which type of wearable device will give them the most bang for their buck. People discuss how they look forward to using a “spy-like” Siri on their wrist with Apple Watch, and leveraging health-tracking functionality in a device like Microsoft Band. They demand certain features of wearable devices, such as GPS, which Apple Watch is lacking (a feature touted in the Gear S 5). Certain features are table stakes for certain consumers and some of them may wait to buy until they have found their ideal match.

For some consumers, needing a smartphone to use a wearable is a limitation 6. Daring Fireball argued how this may be an area of concern for the Apple Watch – the device needs to be more than just a notification system for the iPhone. Likewise, Google Glass was most functional when connected to the MyGlass app via Android (and via iOS as of December 2013), though still usable without a phone. Consumers were impressed that Gear S could function on its own, without being tied to a smartphone. In fact, this was the only device we reviewed that required a separate contract with a telecom provider. Many people considered this factor a negative for the Apple Watch, which doesn’t work properly without an iPhone. Consumers seek a device that is truly standalone with full functionality independent of a connected smartphone, and not simply a notification system for their smartphones. Until that capability is fully developed and optimized, it will continue to be a void in the wearables market.

Microsoft Band on the other hand, while not generating as much pre-launch conversation as the other wearables, does offer cross-platform compatibility with iOS, Android, and Windows – a feature many consumers lauded. Consumers want a device that will be ready to fit into their lifestyle, no matter what platform their smartphone is running and especially if the device is dependent on the smartphone to function. This may take a wait and see approach, determining which new products that come to market better serve their needs.

27%

35 http://gizmodo.com/samsung-gear-s-review-but-i-dont-wanna-be-dick-tracy-16588612236 http://www.theverge.com/2014/7/2/5865895/microsoft-fitness-band-smartwatch-rumors#243431986

3


Of course price matters... or does it?

Of the devices we reviewed, price covered a wide spectrum – from Microsoft Band and Gear S at $199.99, to Apple Watch starting at $349, to Google Glass at $1,500. Price is a contentious topic for the wearables category: generally, people didn’t seem to talk about price much until it came to the higher end models or price ranges. For most brand loyalists, price doesn’t matter. They want the device offering from their brand of choice and are willing to pay for it. Yet Apple Watch is a great example of a product that did have a breaking point for some consumers – consumers compared the Apple Watch Edition model (reportedly starting at $10,000 7) to a Rolex. While this may only apply to a minority of interested consumers, the question remains – why pay a premium for an Apple Watch made of gold if it has a shorter shelf life due to a future Apple Watch 2, when you could use the same money towards a Rolex?

On the flip side, value is a huge concern for consumers – these consumers want to ensure the investment they are making in a wearable will be worth it. Consumers were excited to be invited to the Explorer program prior to Google Glass’s public launch, yet many were put off by the price. Meanwhile, Microsoft Band and Gear S were at a price closer to familiar territory for those already used to the price point of existing fitness wearables like Pebble, FitBit and Jawbone UP; the topic didn’t even come up as a major theme for these products. If you are going to sell a product to consumers at a price higher than the market average, the value proposition for the device must be crystal clear.

14%

4

“Just got an invite to buy Google Glass! Bummer that I don’t have $1600 to fork over. #fail #NotEnoughSavedUp”

Twitter post

7 http://bgr.com/2015/03/12/apple-watch-edition-price-10000-dollars/

4


Don’t make me plug inOne of the innate values of a wearable is that it will quite literally be with you wherever, whenever. But what good is that if its battery life is shorter than your busy day? Consumers report Apple Watch and Google Glass have poor battery life, especially compared to Microsoft Band and Gear S – both of which received attention for their advertised long battery lives 8. Currently, none of the companies in the wearable space have comprehensively addressed the issue of battery life and key questions remain unanswered. For example, how does someone plug in and charge on the go? Success in this space requires exceptional levels of connectivity. This challenge was overcome for mobile phones with the development of mobile battery packs (Mophie, etc.) and it would seem a similar solution will be needed for wearables.

All these brands have advertised certain levels of utility, but every device has its limits. Consumers want to access their apps and tracking systems 24/7, and they expect them to always be on. Some consumers claim that certain wearables may be setting consumers up for unrealistic usage expectations because of the poor battery life. Consumers are accustomed to their notebooks and tablets having long-lasting battery life and will expect the same levels of longevity from any wearable they invest in.

Announcement of wearable – I love it! How awesome!

So excited!

Reality setting in. Hmm...this doesn’t seem as cool as I thought?

Is it worth it?

Brands up their game: Promotions increase, cool features touted,

official launch dates advertised.

10%

5

“The Apple Watch will run for 18 hours... Great news if you’ve become disenchanted with your 24 hour watch that runs for years on a battery.”

Twitter post

Who am I?

At Lastsomething’s going to change

I’ll make this work if it kills me!!

DenialChange? What change?

DisillusionmentI’m off! This isn’t for me

Happiness

Fear

Threat

Guilt Depression

Hostility

Gradual Acceptance

Moving Forward

What impact will this have? How will it affect me?

This is bigger than I thought!

Did I really do that?

I can see myself in this in the future

This can work and be good

8 http://gizmodo.com/samsung-gear-s-review-but-i-dont-wanna-be-dick-tracy-1658861223

5

The emotional journey of new product announcements


SDL Customer Journey Analytics scoring systemThe solution employs a patent-pending metric system to drive measurement for the core business goals and drivers that align with the customer journey: purchase intent (PCS) and the likelihood to advocate for the brand (BCS) to measure and drive consumer behavior. Created through statistical analysis techniques derived from quantitative research and applied to the social media dataset, the scores allows organizations to course correct and seize opportunities in real time, resulting in cost reduction, time savings and competitive advantage. You can learn more about our scoring system by visiting www.sdl.com/si

How can we measure pre-launch success?Our data reveals how consumers openly discuss their thoughts and interests related to wearables, from time of announcement to launch. Marketers and product developers can glean much from these pre-launch conversations to proactively inform strategy.

Yet through the lens of SDL Customer Journey Analytics (CJA), we apply another layer of customer insight that reveals the purchase intent for your product and the underlying ‘why’.

Using CJA’s framework and product commitment scoring algorithm, we have assessed scores to the pre-launch conversations for the four wearable products, allowing us to easily track the performance of the brands and evaluate how well each brand is driving purchase interest in the months leading up to product launch.

As we measure purchase intent of the four products across their respective pre-launch time periods, we see a similar performance pattern emerge from the resulting scores for each brand. And as we model this pattern, three interesting stages emerge:

Stage 1 – Announcement

The announcement by the brand kicks off Month 1 of the pre-launch period. In our data, three of the products were successful in generating strong purchase interest at this critical phase. Their high scores were being driven largely in part by consumers expressing excitement about the prospect of a new device, particularly around what features the device would have, as well as when the device would become publically available.

Apple Watch Google Glass Microsoft Band Samsung Gear 5

Months1

20

30

40

50

60

70

2 3 4 5 6 7 8


At this stage, Google Glass and Apple netted the strongest levels of purchase intent (59 and 61 respectively), as well as highest volume of engaged conversations. They each held specific events to announce Watch and Glass, and as a result each brand was successful in generating awareness and interest.

Microsoft and Samsung, however, performed differently. Each did drive some interest (47 and 44 respectively), but their scores and their corresponding conversation volumes were significantly lower than Apple and Google. Our data suggests these two brands’ lower awareness at the announcement stage contributed to having much lower purchase interest in the products at the time. There was simply not much for consumers to connect with early on as the brands did little to create high levels of engaged conversation – a potential miss in our assessment.

Stage 2 – The Reality

In the month or two following the announcement stage, scores for these products dropped, save for Google who saw an increase in month two. The initial interest and excitement generated at announcement is not sustained and purchase interest and volumes decline.

In our analysis, the excitement of a new gadget began to fade for most of the products – nearly all saw a 6 to 10 point drop in their scores within the first two months following the initial announcement. In October 2014, some Apple Watch users were frustrated with an update from Tim Cook at the Wall Street Journal’s digital conference regarding the poor battery life of the device. Consumers also debated the pros and cons of the Microsoft Band, Apple Watch and other fitness vs. smartwatch wearables. These conversations heavily focused on the design and feature differences between the devices, citing preferences in size vs. design vs. features among the difference options available. Google Glass’ score increased by 5 points in its second pre-launch month due to the Explorer program, whose users excitedly talked about their early access and many beginning to receive the product.


Months1

20

30

40

50

60

70

2 3 4 5 6 7 8

By releasing information about the product early on in pre-launch, Apple and Google were able to maintain excitement and increase awareness and potential connection points with consumers. Microsoft and Samsung invested time in promoting the device later in the pre-launch period, driving scores up, but conversation volumes, as a result, were low compared to Apple and Google.


Yet Glass’s score dropped 11 points in the month immediately following and an additional 7 points the month after to a low of 48. The newness of the device faded for some Google Explorer users, and consumers turned a closer, more critical eye towards privacy concerns with Google Glass.

Stage 3 – The Upturn

As the pre-launch period continued, all product scores increased in the final one to two months. Consumers’ renewed interest in the products and increased efforts from the brands to promote features of the wearables drove increased purchase intent. Apple regained excitement with the pinnacle March Apple event, and Google re-engaged consumers with their one-day early access sale for the public in April.

Samsung is one to particularly highlight as its scores dramatically improved during this stage. Gear S churned up excitement and purchase intent in September at IFA 2014 when the Galaxy Note 4, Note Edge, Gear S and Gear VR devices were announced. Samsung’s timing to announce the Gear S alongside the popular next-generation Galaxy smartphone drove purchase intent and interest in the wearable. And simply announcing an official launch date of the Gear S generated additional excitement from consumers. By teasing out information about the product, from specs to launch to features like SIM card availability, Samsung drove the score up for Gear S from a low of 34 in the month following announcement, to a high of 59 in its final month before product launch.

Though all four products have an upward trajectory during this stage, we believe that trend may not actually linger into the product launch time period and beyond. Device support may come into play, features might not function or be available as expected. On the other hand, we expect to see many positive product experience conversations regarding the convenience of the wearables, as well as consumer excitement about the look of the devices, driving purchase intent.


Months1020

30

40

50

60

70

2 3 4 5 6 7 8

Product Final Month Pre-Launch Score

Apple Watch 60

Google Glass 61

Microsoft Band 53

Samsung Gear S 59

At the end of the pre-launch period,

all products ended on a high note, suggesting the brands did

effectively communicate and promote the bits of product information consumers were

looking for.


Conclusion – wearables are here to stay but... There is no doubt that wearables are here to stay, in many shapes and forms. Different consumers value product attributes more strongly than others and wearables must accommodate these nuances. Some consumers want an affordable device with strong fitness-tracking functionality, and may not desire a stylish, customizable design. Others may only want standalone wearables with comprehensive app availability and the need for it to independently function from a phone.

Using CJA, you can track product conversations prior to launch in order to understand what drives or detracts from initial interest in a product. By measuring and monitoring, you can react and optimize your messaging, product strategy, as well as learn from how your competitors have fared. In our wearables study, Google and Apple set the bar high with large announcement events and high interest levels in their designs, while Samsung and Microsoft missed an early opportunity to engage consumers with their wearable. Samsung and Microsoft were able to ramp up interest in their products with increased scores in the later pre-launch stages, but may have had a greater impact on the market had they been ready from the start.

Ultimately, each consumer is unique with exacting needs. As wearable devices come to market, how businesses address consumer expectations will determine success.

SDL (LSE: SDL) is the leader in global customer experience. With a completely integrated cloud solution for content management, analytics, language and documentation, SDL solves the complexity of managing your brand’s digital footprint as it grows across multiple languages, cultures, websites, devices and channels. Seventy-nine of the top 100 global companies trust SDL to help them create authentic, in-context customer experiences that drive demand and loyalty. SDL brings your brand to the world, and the world to your brand.

Copyright © 2015 SDL plc. All Rights Reserved. All company product or service names referenced herein are properties of their respective owners.

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Learn more at SDL.com.Follow SDL on Facebook and Twitter.

Stay tuned for our next installment where we will analyze how conversations and product performance scores have shifted post-launch.

white paper are wearables here to stay? · conjures up images of floating cars and holograms, ......

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