Does Samsung Have a 'Pickax' in Wearables Gold Rush?

While the Korean electronics giant continues to make its own wearables, it also plans to sell processors to makers of next-gen fitness tracking devices.

Brian Buntz

Despite the problems and the reservation from many consumers, the wearables field is booming, having expanded more than ten fold from 2010 to present--transforming from an industry worth $6.3 million to one worth more than $7 billion in five years. Statistica predicts the market to be worth over $12 billion by 2018.

Having struggled to carve out a sizable portion of the wearables market, consumer giant Samsung appears is hoping to sell processors to other wearable companies. Samsung hopes to convince other wearable companies to buy its Bio-Processor chip, which can monitor ECG levels, body fat, skin temperature, galvanic skin response, and heart rate. If the device proves popular with major wearables companies, the company could succeed as Levi Strauss and other like him in the California Gold Rush, who made their fortune not by finding gold, but by selling supplies to them.

Despite the fact that wearable sales are surging--having tripled in the past year, they are relatively expensive health toys. And the makers of the devices struggle to keep their users engaged in the long run. Roughly one third of FitBit users, for instance, ends up abandoning their device with six month's of purchase, according to one estimate.

While the most popular wearable devices cost around $100, similar step-tracking functionality can be had for less than $10 or even less than $5. To be fair, the most recent activity trackers have nice designs and throw in other features, like heart-rate monitoring and the ability to monitor incoming phone calls. But then again, inexpensive pedometers haven't been linked to skin rashes, either.

That doesn't mean that there isn't a lot of potential in the field of wearables. Potentially, wearable devices could be a boon for health tracking, enabling people to monitor everything from their skin temperature to their stress levels.

Samsung's BioProcessor may be an indication of where the future of wearables is headed. The chip, which the company says is the first that is able to monitor multiple metrics, was announced shortly before CES kicks off in Las Vegas. Coincidentally, January, the month of new year's resolutions, is also when consumer interest in fitness peaks, as reflected in Google search trends. Apparently, Google search volume for "FitBit" also surges in December and January.

Although Samsung has seen its overall market share in the wearables landscape decline recently, it is not resting on its laurels. The company will display three of its latest wearable devices at the upcoming CES show. These include the Welt belt-based lifestyle tracker, a controller for its Gear VR headset, and TipTalk, a new UX for smartwatch-based calls.

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