Jawbone Takes a Bigger Bite of ‘Wearable Technology’ Market

Company makes a $100 million buy for rival BodyMedia

   

In the coming years, technology will start to invade more traditional products. More cars will have LTE capabilities. Refrigerators will be connected to the Internet. Tech even will become part of our everyday attire — just look at the head of steam Google (NASDAQ:GOOG)’s getting behind its Google Glass.

That last item is part of a trend known as “wearable tech.”

Numerous companies are pushing hard to innovate in this field, though perhaps one of the most notable is a company called Jawbone.

Founded more than a decade ago, Jawbone started with a focus on audio technologies, such as Bluetooth headsets, military-grade noise-cancellation systems and wireless speakers.

But then the company leveraged some of its core technologies into a product called UP — a wristband that tracks your movements and sleep activities. A key part of this is connection to a mobile device, such as a smartphone or tablet.

As the market is in its early stages, Jawbone has opted to buy up rivals to to snap up talent and technology. Most recently, it pulled off a potentially transformative deal, shelling out more than $100 million to buy up BodyMedia.

BodyMedia goes beyond the traditional (and fairly simple) approaches to health monitoring. Often this means using functions like accelerometers, which are built into phones. However, these are often inaccurate, so BodyMedia instead builds its own devices that use sophisticated sensors, which detect skin temperatures and sweat levels. The company has obtained FDA approval for its systems and has 87 patents.

These will be vital to Jawbone as it competes against mega companies like Nike (NYSE:NKE), which has its own device, the Fuelband, as well as expected future offerings from Samsung (PINK:SSNLF) and Apple (NASDAQ:AAPL).

The wearable technology still is in its nascent stages, so we’re sure to see flops and outright disasters along the way — that’s just part and parcel of innovation. But expect the market to get more visibility, especially as the mega-players plow money into R&D and marketing.

As that happens, expect a variety of hot IPOs to start popping into the market — and expect Jawbone to be among them.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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