Nokia's winding down on digital health doesn't mean a poor prognosis for other wearables
- Summary:
- Nokia's giving up on its Digital Health adventure, but the likes of Fitbit and Apple see huge potential ahead.
The story so far - Nokia splashed out $191 million to buy French firm Withings back in 2016, using the acquisition to launch health-centric smartwatches and other devices, as well as replacing the Withings Health Mate app with its own Nokia-branded version, something which didn’t go down well with the user base.
The first public signs of trouble emerged in October last year when Nokia announced a $164 million write-down on Withings. In February this year, The Verge got hold of a memo that revealed that Nokia execs could see “no path forward” to the Digital Health business and announcing a review of the division.
The decision has now been taken to sell what’s left of the Withings business back to its co-founder Eric Careel as “part of Nokia's shift to become a business-to-business and licensing company”. Careel will pick up Nokia’s entire Digital Health portfolio including its entire “ecosystem of hybrid smartwatches, scales and digital health devices”.
The deal is expected to close later this year and will doubtless be pored over as a misadventure on the part of Nokia. But is this a case of strategic failure by Nokia or does it say something more about the health wearables market as a whole? Is there just too much user entrenchment around FitBit and the Apple Watch to make room for the likes of Nokia?
According to Juniper Research, global shipments of fitness wearables will go from around 5 million in 2018 to nearly 30 million by the end of 2022, with markets outside of the U.S. and Europe accounting for half of that. In a recent white paper - Fitness Wearables: 3 Must-Haves to Succeed - the research firm identifies three main functional characteristics that are needed from such devices to succeed.
(1) Multiple metrics - Juniper says:
One of the key problems with fitness wearables is sustaining user engagement, which means providing something more than just raw numbers, so most wearables vendors offer advice to users through their apps. Being able to track multiple metrics, like activity levels and heart rate in addition to step counting, makes that much easier to do.
(2) AI - Juniper says:
In time, Juniper expects these platforms to be able to process information from a range of sources as standard, with the analytics platforms being the primary offering of the wearables…device vendors need to discover how best to sell both devices and the analytics in a way that makes them distinct from competitors.
(3) Know which fitness you need to target - Juniper says:
In part driven by the diversification in form factor, several wearables are now targeting more specific uses than the always-on lifestyle tracking on which many fitness wearables focus. Such devices, like smart running shoes, specialist running smartwatches or biometric-tracking wearables, can track biometrics while being worn, but are not intended for constant wear.
Healthcare focus
As noted previously, Fitbit has committed to pushing more deeply into the healthcare market, particularly in the U.S. where it’s starting to see some traction in working with health providers. CEO James Park cites the example of the United Healthcare Motion program as a case in point:
We believe that technology in wearable devices had flipped the traditional narrative in health care, empowering consumers with real information about their health. We believe this presents an opportunity to leverage our brand, engage consumers and change their behaviors.
For example, the acquisition of Twine Health will help us to further extend our reach into the healthcare system and help drive meaningful results for people. Through this proven coaching platform, we can help healthcare providers better support their patients beyond the [indiscernible] clinical environment, which can lead to improved health outcomes and lower medical costs. Twine Health provides an interactive coaching experience that combines both technology and real-time support through a convenient, secure mobile application.
Fitbit has also announced a tie-up with Google - one of the rumored potential buyers for Nokia’s Digital Health business - to expand its healthcare footprint. Park says:
Fitbit and Google are exploring the development of consumer and enterprise health solutions. We intend to use Google's new Healthcare API to help us integrate further into the health care system to just connecting user data with electronic medical records.
Combining Fitbit data with EMRs can provide a more comprehensive view of the patient profile, leading to more personalized care. Both companies will also look to work together to help better manage chronic conditions like diabetes and hypertension by using services such as Fitbit's recently acquired Twine Health.
Using Google's Cloud Healthcare API, Twine can make it easier for clinicians and patients to collaborate on care, helping lead to better health outcomes and positive returns for employers' health plans and hospitals. In addition, Fitbit will also move to Google's cloud platform.
Google will provide Fitbit with next-generation cloud services and engineering resources, allowing Fitbit to scale faster. Finally, we'll be working together to transform the future of wearables.
Over at Apple, there’s no slowdown in the wearables business, with CEO Tim Cook pointing to double digit year-on-year growth, fuelled by interest in health and fitness:
Millions of customers are using Apple Watch to help them stay active, healthy and connected and they have made it the top selling watch in the world…with Watch OS 4.2, there are more features than ever before. For example, in addition to tracking your workouts and heart rate, skiers and snowboarders can record runs, see vertical descent and calculate speed, as well as contribute data directly to the Apple Watch activity app.
The focus on health extends beyond wearables and into iOS mobile devices, he adds, with Apple citing iPhone commitments from a number of leading U.S. healthcare providers, including Cedars-Sinai, the Mayo Clinic and HCA Healthcare, with iOS apps used to support clinical workflows, communications and care delivery. Cook says:
In iOS 11.3, patients in nearly 40 health systems representing hundreds of hospitals and clinics can now consolidate their medical records from multiple sources and view them all in one place, right from their iPhone. This data is encrypted and protected with the user's iPhone passcode, and it can help them better understand their health history, have informed conversations with doctors and family members, and make future health care decisions.
But it’s around the Watch where Cook says that Apple thinks “very broadly” about the healthcare market:
You can tell that a bit by some of the things that we've had going with ResearchKit and CareKit and most recently the health records…those all came out of getting significantly engaged in the Apple Watch and sort of pulling the strings, so to speak. We also have a heart study that is going on currently. I don't want to give too much away, but it's an area of great interest where we think we can make a big difference in. And so [healthcare is] a major strategic thrust of ours.
My take
While I know I have a Fitbit tucked away in a desk drawer somewhere at home, it’s not something that I ended up wearing for very long. I’m not alone in this - Fitbit itself has estimated that abandonment rates for devices can be as high as 40% of registered users in any given year.
So I was never going to be a target customer for Nokia here. Trouble is, not a lot of other people were. It looks like some basic mistakes were made - buy in a proven and popular app, then change it! - and this isn’t going to go down as Nokia’s finest hour. But it’s clear that the future of health and fitness mobile and wearable devices has a very good prognosis.