“Quantified Self” alone can’t sustain the Apple Watch

Posted on September 29, 2014 by Eric Benjamin Seufert

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Apple announced its long-anticipated Watch (henceforth referred to as the Apple Watch) on September 9th, along with its new iPhone models. Although the Apple Watch is certainly more than simply a timepiece – for a good overview of the Apple Watch’s functionality, see this review on watch blog HODINKEE – whether or not the device creates opportunities for new behaviors to emerge or simply adds a more-accessible screen to facilitate existing behaviors remains unclear. Given that the Apple Watch cannot be operated independently of an iPhone (it’s officially a companion product), Apple seems to be indicating that the success of the Apple Watch isn’t predicated on catalyzing new behaviors (at least in the short term).

Predicting how consumers will react to a new device is foolhardy and pointless: as almost everyone chiming in on the matter has pointed out, the same questions being asked ad nauseam about the commercial viability of the Apple Watch were asked about the mobile phone and tablet, and those devices have become the ubiquitous mechanical accoutrements of modern life (although, to be fair, the same questions were also asked of failed commercial technology endeavors like the Apple Newton; people tend to only remember winners). For an interesting take on how (and whether) the Apple Watch might find its commercial legs, see Ben Evans’ analysis.

While attempting to forecast the success of the Apple Watch is a fool’s errand, it is nonetheless curious that the subtext of some of the most vociferous enthusiasm over the product seems to be related to its application as a tool for the “quantified self”. While it’s true that the Apple Watch will allow for users to track various aspects of their physical condition in real time – the watch is outfitted with several sensors that will track a user’s heart rate, activity levels, and expended calories — this use case alone seems unlikely to render the device a commercial success, given how small the “quantified self” movement is.

In 2013, “digital fitness trackers” such as the Fitbit and Nuke FuelBand generated sales of just $238MM, with Nike, Fitbit, and Jawbone capturing 97% of those revenues. 2.7MM wearables were shipped in the first quarter of 2014, of which 50% were manufactured by Fitbit. As Business Insider reported in May, Motorola – with only a 4% share of the US smartphone market – shipped more smartphone units in the US in 2013 than did all fitness tracker manufacturers combined.

Despite the massive amount of press that “quantified self” software and hardware start-ups garner, it is a relatively niche market, especially in the US, where 35.7% of adults are obese, with that rate projected to climb to more than 50% by 2030. Although many self-identifying quantified self practitioners are rabid proponents of the lifestyle, a massive market for these devices and the software that supports them doesn’t seem to fit the observable narrative of health in the United States (and given its dramatic trajectory, these devices alone are unlikely to change that narrative).

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Outside of the US, health indicators look better but are still not encouraging: many of the world’s largest economies will face overweight rates of more than 20% by 2020. These metrics doesn’t bode well for the global market for health micromanagement software.

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Considering this data, it seems unlikely that the market for fitness trackers can grow beyond the people in these countries that consider themselves athletes and already dedicate a portion of their disposable income to fitness. The CEO of RunKeeper, an app that tracks and maps the course of a user’s run via their mobile phone, said as much recently:

“What we started to notice was this fitness-specific hardware was on a road to nowhere, because over time it’s on a path to commoditization and how can they possibly maintain these margins when there’s less and less differentiation and more and more players in the market?…So from a focus standpoint, we’re squarely focused on being the software that powers the fitness component of phones and, in general, wearables. And while we still plan to integrate with the third party inputs, we don’t think the standalone devices that are fitness specific are the vehicle that is going to take this stuff to the mass market. We think it’s going to be the phone.”

The Apple Watch may very well become a massive commercial success based on use cases that are obvious today or will seem obvious in hindsight. But the relatively tiny market for quantified self applications seems unlikely to contribute meaningfully to Apple Watch sales, despite the disproportionate clamor the quantified self movement has made about the device. While it’s certainly true that the Apple Watch may buoy the quantified self movement (and capture revenues from Fitbit, Jawbone, and Nike in the process), it seems unlikely that the opposite is true. The quantified self movement alone won’t propel the Apple Watch to commercial success.