Wearables in organizations

Netcetera experts assess their use in a Netzwoche interview

Andrej Vckovski, CEO of Netcetera, and Reto Grob, Principle Architect at Netcetera, about wearables: They comment on use cases for companies, trends and a possible development in coming years.

Andrej Vckovski is the President of the Swiss Internet Industry Association (Simsa) and CEO of Netcetera.Andrej Vckovski
«Developers risk being replaced by device manufacturers»

What trends do you see in the wearables market in Switzerland?

Andrej Vckovski: The first question is, what do we mean by wearables? The term refers to more than just watches or fitness trackers. Wearables also include smart clothing, such as jackets with sensors. For example, you could make a jacket that vibrates when the driver should turn left or right. That could be useful for motorcycle riders. There are medical devices significantly more sophisticated than simple fitness trackers. They measure the blood sugar level or the activities of elderly users.

Fitness applications are well known. What other interesting areas are there?

An interesting trend is wearables for farming, such as live tracking of animals. Consider horses, for example. With wearables you could keep track of when the horses are walking around in the pasture and when they are standing in the stable. That’s useful information for breeders of sport horses, so they can adapt diets and feed mixes to the activity profiles of their animals. With motion detectors and GPS, farmers could keep track of farm animals such as cows and sheep.

What does the cost factor look like, for example with cows?

At the moment there is an analog wearable – the cow bell. The manufacturing costs of digital wearables are basically low. What the market lacks now is major suppliers with a focus on farming. That is a big opportunity for Swiss developers.

What possibilities do you see for wearable apps in the business environment?

There you don't even need a smartwatch; a key fob with an RFID chip or a credit card is enough. However, watches and other devices can integrate more functions, such as access authorizations, tickets or customer loyalty plans, because they are more programmable.

Are smartwatches and other wearables essentially just a hype? New toys for bored iPad owners?

Today, computers can be made so small, energy efficient and communicative that they can be used everywhere. That's why wearables are definitely not a hype.

Has Apple aroused the interest of the developer community?

Previous smartwatches were mainly regarded as nerd gadgets. The Apple Watch could change that. App development will follow a similar hype curve as with smartphones. At first a lot of new apps will be published, and later the wheat will be separated from the chaff. In the end, the most popular apps will emerge from the masses and dominate the market.

What challenges still have to be addressed?

There are still technical hurdles, such as power consumption. The batteries of most smartwatches have to be recharged every day. One of the big challenges is the user experience. For instance, how many times you have to press a button to trigger a specific action. With the increasing number of computers, from wearables and smartphones to PCs, it is more important to have an integrated user experience. Consider a phone conversation, for example: you are walking to your car and you see on your smartwatch that someone is calling you. You take the call on your smartphone. Ideally, in the car the call should be transferred to your hands-free system completely automatically. These handovers from one device to the next will become more important in the future. The problem with this is that wearables often only work with smartphones of the same make.

How good is the cooperation with the major platform providers, such as Apple and Google?

Google is basically less restrictive with releasing apps in Google Play than Apple in the App Store. However, communication with both providers is difficult when there are questions. For example, about functions like in-app purchasing. It is not always clear when a transaction becomes an in-app purchase – for example, renewing a contract agreement. Unfortunately, there are not any direct contacts for dealing with questions in advance, as is usual with other IT manufacturers. Companies such as Netcetera offer consulting in these cases. Another problem is uncertainty about the strategies of smart device manufacturers.

What do you mean by that?

Developers are always faced with the question of which functions the platform provider offers directly and which ones independent developers can offer. Apple integrates local public transport data into its map service. That makes Apple a competitor for developers who offer public transport apps. Another example is the streaming service Spotify. Apple is targeting the same market with Apple Music. In those situations, developers run the risk of being replaced by the device manufacturers. This means that independent developers always have to adapt to the changes in the strategies of the platform makers.

How does Simsa support Swiss developers?

Our aim is to create an attractive environment for developers. For example, we established the Best of Swiss App Award in cooperation with the Smama industry association. This award is intended to draw attention to the developer community and its projects. Another aspect is that developers always take a business risk when they produce an app, and we want to reward these developers with the prize. The award gives them more market visibility.

Reto Grob is Principal Architect at Netcetera and member of the management board of Smama.Reto Grob
«It's possible to earn a lot of money with an app»  

What possibilities do you see for wearable apps in the business environment? Can you give us an example?

In the business environment we see potential for short messages sent to employees who are not sitting in front of a computer, for example field service employees.
For example, a delivery driver on the road is instructed to alter the delivery route. Small interactions, such as confirming an action, are also possible.

What app projects for wearables have you already developed? (Is there an especially interesting or unusual project?)

Netcetera launched Wemlin for the Apple Watch in April. Wemlin is a practical aid for public transport users – it shows the departure times from the closest stops. The app for Android Wear is currently in development.
We are also developing apps for wearables for some of our customers.

What is the customer response? Are you flooded with requests, or is app development for wearables not significant for your company?

We see app development for wearables as a definite future trend. Innovative companies are jumping on the bandwagon and extending their existing product portfolio or apps with additional functions for smartwatches.
However, the demand is still limited right now due to the low market penetration of smartwatches. In addition, people first want to get a better idea of the potential benefits.

How do the app store providers Google, Apple and Microsoft work with you, and how do you share in the sales revenue?

With our apps we only generate revenue from in-app purchases, for example for extended functions. The app store providers support us with online information (user guides, etc.), reviews of apps and developer events.

What is more attractive: developing an app for the app stores (Apple, Google, Microsoft) or developing an app for business customers? Why is that?

You can earn a lot of money from an app in an app store, but your chances are very small. According to studies by App Economy, 1.6% of the apps account for 98.4% of the revenue and 88% of the developers have less than $10,000 revenue per month.

Apps for business customers are more attractive because the revenue and the cost/benefit ratio are more predictable.

The Apple Watch will be available in Switzerland at the end of June. Is it a game changer or just a nice accessory?

The hardware and the design of the Apple Watch are cutting-edge. The software is still too limited, but it will get a lot better in the coming versions.
We do not see the Apple Watch as a game changer because it is not the first smartwatch and the functions do not stand out from the competition. However, the Apple Watch shows that the market is big enough, and it will probably trigger serious marketing efforts in the entire industry.

Looking into your crystal ball, how do you see the Swiss wearables market developing in the next five years?

In five years, smartwatches will be much more mature, which means thinner, a better display, more reliable sensors and always on. The services will provide true added value, which will draw more and more customers.
Open platforms, such as Apple Watch and Android Wear, will displace proprietary and closed systems, like many of the fitness armbands, into niche markets.

Glasses and other wearables will be mainly limited to the business environment or the entertainment sector, due to lack of acceptance in the public realm.

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