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Attempting to combat obesity levels around the time of the 1964 Tokyo Olympics, Japanese professor Dr Yoshiro Hatano unveiled the “Manpo-kei” (translation: 10,000 step-meter), the world’s first wearable fitness device by modern definitions.
Over half a century later, the guideline of 10,000 steps is still used as a benchmark by many fitness wearables today, but these devices have advanced a long way since Dr Hatano.
Smartwatches lead the way
The popularity of wearable fitness devices has skyrocketed in recent years, with wider ranges of product offerings being released to match the demand.
Smartwatches are the dominant product category in the wearables market, making up >60% of total revenues. This space is dominated by global leaders such as Apple (Apple Watch), Samsung (Galaxy Fit), and Google (Fitbit) with strong offerings and large, loyal user bases.
Demand for other product categories has not yet reached the same levels as for smartwatches. However, firms are beginning to see attractive gains in these areas, as with Oura’s smart ring and Whoop’s wristband.
Customer Segments
Companies must identify clear strategies to target the diverse customer segments: casual users, fitness enthusiasts, and elite athletes
Casual users
Casual users tend to be motivated by general health and wellness goals. Ease of use and affordability typically rank among the most pressing concerns here. With little prior engagement with health and fitness, this segment provides low user retention. Higher price sensitivity may also present challenges for firms seeking to justify premium pricing models. With simplicity and value-for-money the core drivers, winning products will be those that offer clear benefits without overwhelming users.
Fitness enthusiasts
Fitness enthusiasts demand higher levels of product accuracy than casual users, and seek more advanced features and insights from their devices. This segment is the most crowded of the three, with firms seeking to capitalise on the many consumers (whether lifelong fitness enthusiasts or formerly casual users) willing to spend more on their fitness goals. Offering devices that are not only reliable and feature-rich but also integrate seamlessly with existing fitness routines is the way to win with this segment.
Elite athletes
For elite athletes, cutting-edge wearable devices have become essential tools for performance enhancement, reportedly even in cases where the in-game use of wearables is officially prohibited (see DeAndre Jordan in 2017). Athletes find tangible advantages from using these products in optimising their training routines, recovery practices, sleep schedules, and more. The challenge in this space is for products to maintain this exceptional level of accuracy to justify high spend from teams and athletes, with success often necessitating partnerships with sports teams or professionals to ensure product suitability.
Growth in the wearables market is driven by greater health awareness, the ever- increasing quality of products available, and the desire for community among the sports-conscious
Greater health awareness
Perhaps the most prevalent trend across the sports industry at large is a growing awareness among consumers of their own health and fitness. Nowhere does this trend translate more neatly into revenues than the wearables market. Wearables provide the knowledge and insights about the user’s health and fitness that modern consumers crave. This trend is magnified by increased adoption of these devices by professional athletes.
Increasing product quality
Rapidly increasing product quality is another important growth driver. This is partly attributable to considerable investment from large incumbents, particularly in improving integration capabilities. Where earlier wearables tended to be stand-alone devices, most recent releases offer seamless integration with related products, especially within the same product ecosystem. We are also seeing these devices become increasingly intertwined with fitness apps, fostering a mutually beneficial relationship between two of the sports industry’s most thriving sectors.
Community aspect
Also key for growth in the wearables market has been consumers seeking community and belonging. Successful wearable devices across all customer segments have tapped into this desire, and are reaping the rewards. The social and community features integrated into the software behind many current wearables allow users to connect with like-minded individuals and join supportive sub-groups on their fitness journeys. From a firm’s perspective, investment in these features pays off through increases in consumer loyalty and lifetime customer value.
The core challenges for firms to overcome are lacklustre user retention and failing to stand out from the crowd
User retention
User retention remains one of the key challenges facing wearable device makers. After the initial post-purchase excitement fades, many consumers neglect their devices due to loss of interest or dissatisfaction with the product’s functionality. The result is a constant need to acquire new customers to maintain growth, leading to soaring CAC (Customer Acquisition Cost). Incumbents must find innovative ways to build ‘stickier’ products if they wish to retain customers and build the long-term user bases required for sustained profitability.
Market saturation
The second fundamental challenge lies in the market’s saturation, particularly for smartwatches. Enticed by attractive revenues, global category leaders have invested heavily in these areas, with major players spending millions on development of their smartwatch offerings, spending on both organical and inorganic growth of their range. Players seeking to win in the wearable devices market must develop a competitive advantage over the global leaders, or else turn to less popular product categories where existing offerings – and revenues – are less strong.
Company Background
A seemingly overnight success in fitness wearables comes in the form of Whoop. Founded in 2012, Whoop offers a wearable activity tracker to support users in achieving their fitness goals. The product combines hardware and software, with a wearable device linked to proprietary software through a mobile app, monetised via monthly subscription service.
Where Whoop distinguishes itself is in the accuracy and range of biometric data points measured. Metrics are strictly limited to those identified as “scientifically significant”, such as heart rate variability (HRV) and oxygen saturation (SpO2). These data points are then transformed into market-leading insights for users to optimise training, recovery, and sleep.
A fully established disruptor
Whoop declared itself the world’s most valuable standalone fitness monitoring start-up (estimated valuation $3.6bn), after the close of its $200m Series F financing round led by SoftBank Vision Fund II in August 2021. This round took the total capital raised by the company to just over $400m.
As well as deep-pocketed VCs, the company’s cap table features high-profile elite athletes, namely Rory McIlroy, the Kevin Durant-owned Thirty Five Ventures, and Cristiano Ronaldo, who was also announced in May 2024 as an official global ambassador of the company.
Eagle-eyed spectators will also have noticed the product’s strong presence at this summer’s Paris Olympics, worn on the track (Sha’Carri Richardson, Liz Clay), in the water (Fintan McCarthy, Rowing Ireland), on the hockey pitch (Belgium Women), and beyond.
Ensuring continued success
Today, Whoop is firmly established as a serious contender in its space. Going forward, one suspects that the company’s further success will hinge largely on its ability to retain its share in the face of competition from the market’s major players. Google’s acquisition of Fitbit completed in January 2021 for $2.1bn, together with Apple CEO Tim Cook’s repeated comments that “health and wellness” will represent the company’s “greatest legacy” suggest no let-up in appetite for the digital health space among the tech giants.
On the other hand, Whoop CEO Will Ahmed may take comfort from Amazon’s failed attempt to encroach on the space in the form of its now-discontinued Halo band.
Being well capitalised, loyally supported by users, and increasingly entrenched within elite sports
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Attempting to combat obesity levels around the time of the 1964 Tokyo Olympics, Japanese professor Dr Yoshiro Hatano unveiled the “Manpo-kei” (translation: 10,000 step-meter), the world’s first wearable fitness device by modern definitions.
Over half a century later, the guideline of 10,000 steps is still used as a benchmark by many fitness wearables today, but these devices have advanced a long way since Dr Hatano.
Smartwatches lead the way
The popularity of wearable fitness devices has skyrocketed in recent years, with wider ranges of product offerings being released to match the demand.
Smartwatches are the dominant product category in the wearables market, making up >60% of total revenues. This space is dominated by global leaders such as Apple (Apple Watch), Samsung (Galaxy Fit), and Google (Fitbit) with strong offerings and large, loyal user bases.
Demand for other product categories has not yet reached the same levels as for smartwatches. However, firms are beginning to see attractive gains in these areas, as with Oura’s smart ring and Whoop’s wristband.
Customer Segments
Companies must identify clear strategies to target the diverse customer segments: casual users, fitness enthusiasts, and elite athletes
Casual users
Casual users tend to be motivated by general health and wellness goals. Ease of use and affordability typically rank among the most pressing concerns here. With little prior engagement with health and fitness, this segment provides low user retention. Higher price sensitivity may also present challenges for firms seeking to justify premium pricing models. With simplicity and value-for-money the core drivers, winning products will be those that offer clear benefits without overwhelming users.
Fitness enthusiasts
Fitness enthusiasts demand higher levels of product accuracy than casual users, and seek more advanced features and insights from their devices. This segment is the most crowded of the three, with firms seeking to capitalise on the many consumers (whether lifelong fitness enthusiasts or formerly casual users) willing to spend more on their fitness goals. Offering devices that are not only reliable and feature-rich but also integrate seamlessly with existing fitness routines is the way to win with this segment.
Elite athletes
For elite athletes, cutting-edge wearable devices have become essential tools for performance enhancement, reportedly even in cases where the in-game use of wearables is officially prohibited (see DeAndre Jordan in 2017). Athletes find tangible advantages from using these products in optimising their training routines, recovery practices, sleep schedules, and more. The challenge in this space is for products to maintain this exceptional level of accuracy to justify high spend from teams and athletes, with success often necessitating partnerships with sports teams or professionals to ensure product suitability.
Growth in the wearables market is driven by greater health awareness, the ever- increasing quality of products available, and the desire for community among the sports-conscious
Greater health awareness
Perhaps the most prevalent trend across the sports industry at large is a growing awareness among consumers of their own health and fitness. Nowhere does this trend translate more neatly into revenues than the wearables market. Wearables provide the knowledge and insights about the user’s health and fitness that modern consumers crave. This trend is magnified by increased adoption of these devices by professional athletes.
Increasing product quality
Rapidly increasing product quality is another important growth driver. This is partly attributable to considerable investment from large incumbents, particularly in improving integration capabilities. Where earlier wearables tended to be stand-alone devices, most recent releases offer seamless integration with related products, especially within the same product ecosystem. We are also seeing these devices become increasingly intertwined with fitness apps, fostering a mutually beneficial relationship between two of the sports industry’s most thriving sectors.
Community aspect
Also key for growth in the wearables market has been consumers seeking community and belonging. Successful wearable devices across all customer segments have tapped into this desire, and are reaping the rewards. The social and community features integrated into the software behind many current wearables allow users to connect with like-minded individuals and join supportive sub-groups on their fitness journeys. From a firm’s perspective, investment in these features pays off through increases in consumer loyalty and lifetime customer value.
The core challenges for firms to overcome are lacklustre user retention and failing to stand out from the crowd
User retention
User retention remains one of the key challenges facing wearable device makers. After the initial post-purchase excitement fades, many consumers neglect their devices due to loss of interest or dissatisfaction with the product’s functionality. The result is a constant need to acquire new customers to maintain growth, leading to soaring CAC (Customer Acquisition Cost). Incumbents must find innovative ways to build ‘stickier’ products if they wish to retain customers and build the long-term user bases required for sustained profitability.
Market saturation
The second fundamental challenge lies in the market’s saturation, particularly for smartwatches. Enticed by attractive revenues, global category leaders have invested heavily in these areas, with major players spending millions on development of their smartwatch offerings, spending on both organical and inorganic growth of their range. Players seeking to win in the wearable devices market must develop a competitive advantage over the global leaders, or else turn to less popular product categories where existing offerings – and revenues – are less strong.
Company Background
A seemingly overnight success in fitness wearables comes in the form of Whoop. Founded in 2012, Whoop offers a wearable activity tracker to support users in achieving their fitness goals. The product combines hardware and software, with a wearable device linked to proprietary software through a mobile app, monetised via monthly subscription service.
Where Whoop distinguishes itself is in the accuracy and range of biometric data points measured. Metrics are strictly limited to those identified as “scientifically significant”, such as heart rate variability (HRV) and oxygen saturation (SpO2). These data points are then transformed into market-leading insights for users to optimise training, recovery, and sleep.
A fully established disruptor
Whoop declared itself the world’s most valuable standalone fitness monitoring start-up (estimated valuation $3.6bn), after the close of its $200m Series F financing round led by SoftBank Vision Fund II in August 2021. This round took the total capital raised by the company to just over $400m.
As well as deep-pocketed VCs, the company’s cap table features high-profile elite athletes, namely Rory McIlroy, the Kevin Durant-owned Thirty Five Ventures, and Cristiano Ronaldo, who was also announced in May 2024 as an official global ambassador of the company.
Eagle-eyed spectators will also have noticed the product’s strong presence at this summer’s Paris Olympics, worn on the track (Sha’Carri Richardson, Liz Clay), in the water (Fintan McCarthy, Rowing Ireland), on the hockey pitch (Belgium Women), and beyond.
Ensuring continued success
Today, Whoop is firmly established as a serious contender in its space. Going forward, one suspects that the company’s further success will hinge largely on its ability to retain its share in the face of competition from the market’s major players. Google’s acquisition of Fitbit completed in January 2021 for $2.1bn, together with Apple CEO Tim Cook’s repeated comments that “health and wellness” will represent the company’s “greatest legacy” suggest no let-up in appetite for the digital health space among the tech giants.
On the other hand, Whoop CEO Will Ahmed may take comfort from Amazon’s failed attempt to encroach on the space in the form of its now-discontinued Halo band.
Being well capitalised, loyally supported by users, and increasingly entrenched within elite sports
Accelerate Ventures
Accelerate Ventures 40-42 Hatton Garden London EC1N 8EB
