It looks like Google (GOOG,GOOGL) is going to enter the wearables market directly, with its own wristband. According to Bloomberg, the company’s Google X Lab and life sciences group are currently testing an experimental Google health band.
Google has been a leader in the rapidly expanding wearables market, but the approach it’s taking with the new device is decidedly different from its two most notable efforts to date: Google Glass and Android Wear.
Instead of targeting consumers, the Google health band is being aimed at researchers, doctors and drugmakers. Quoted in the Bloomberg piece, Andy Conrad, the head of Google’s life sciences team said:
“It won’t be marketed as a consumer device. Our intended use is for this to become a medical device that’s prescribed to patients or used for clinical trials.”
In contrast, Google Glass — the smart glasses that have marked a low point for wearables and represented a very public stumble for Google — were aimed at the consumer market, despite having potential professional and medical applications.
Android Wear, the operating system for wearables (primarily smartwatches) that Google is pushing as a platform to be adopted by manufacturers is also being used primarily for consumer devices.
Android Wear does include support for health applications. Wearables can measure basic stats like pulse rate and steps taken, but the measurement accuracy and data collected isn’t “medical grade.”
Google,
Apple (AAPL) and Samsung (SSNLF) have all made a play for providing a health platform that connects consumers’ wearables data with medical professionals. The problem with these efforts (beyond issues like privacy) is the data is being measured by devices that aren’t certified as being medically accurate. Your Fitbit or Apple Watch collects data that’s good enough for staying on top of your general fitness, but health technology that’s used for medical purposes has to be better.
Despite their health industry aspirations, it seems unlikely that Apple, Samsung, Fitbit (FIT) or other fitness wearables manufacturers would make hardware that could pass muster.
Doing so would likely bring their smartwatches under the oversight of the Federal Food and Drug Administration and that means a much stricter regulatory approval process. According to stats from Emergo, the average time taken for a medical device to gain FDA approval is six months. Making an Apple Watch, Galaxy Gear or Fitbit Charge for medical use would require more expensive components, additional testing and considerably lengthen the time between releases once that FDA approval process is factored in. It could also wreak havoc with operating system updates, which may also require approval before release.
Makers of wearables like smartwatches and fitness trackers like to release new hardware every year. Bringing the FDA into that equation would spell an end to the profitable yearly upgrade cycle.
It’s also unclear how much revenue could be up for grabs with medical wearables like the Google health band. The health technology market in the U.S. is a massive $110 billion, but that includes everything from big ticket items like MRI scanners to latex surgical gloves. A wristband that tracks patient vital signs would be a tiny fraction of that pot.
That’s another advantage the Google health band has over rival wearables: Google X is tasked with “moonshots” that represent major technological advancements. Profitability of its projects isn’t a factor, at least not in the short term.
The health band, which will be undergoing clinical trials this summer, is a departure from the company’s previous wearables strategies, but this new approach may benefit Google significantly in the long run. If its health band is approved and commercialized, it gains a foothold in the lucrative health technology industry. That’s another small step toward diversification and could help it to leverage other products (like Google Glass) in that market.
The company may also bypass consumer buying cycles altogether. What if the Google health band gained acceptance with doctors and they saw sufficient benefit in it to push for wide scale distribution as a preventative approach to health care? Google’s project leader, Conrad, sees that as a possibility: “I envision a day, in 20 or 30 years, where physicians give it to all patients.”
That scenario would see Google collecting the revenue from hardware sales — without having to pony up for big marketing blitzes — and make it tougher for competitors to muscle in after the fact.
Even if the health band doesn’t make it so far as being prescribed to patients, If Google is seen by consumers as offering FDA approved wearables, it may also be able to leverage that “halo effect” to push its own health platform into wider adoption and help boost Android Wear smartwatches over the Apple Watch.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
