For the Fall 2015 semester, our final project was focused on exploring the disruptive status of wearable technology. My group focused on the category of hearables: here are our findings.

1. ‹#›
HEARABLESA DISRUPTIVE INNOVATION
Keaton Batten
Jenna Bonner
Tiffany Iriana
Sam Stanford

2. ‹#›
EXECUTIVE
SUMMARY
“Sound drives the bulk of
our technology use and earbuds
are the only piece of wearable
tech to have gained ubiquity and
social acceptance. These devices
are about to undergo a revolu<on
in capability, ge>ng rid of their
cables and giving them the
opportunity to be the standard
bearer for wearable technology”

3. 3
1910 1958 1978 2001 2007 2009 2015 2018
Headphones
are first manufactured
by Nathaniel Baldwin
Supra Aural
headphones are sold
for mobile listening
Stereo
headphones are sold
for at home listening
iPhone
the rise of the smart
phone era begins
iPod w/Earbuds
Mobile music and
inconspicuous earbuds
are introduced Fitbit
is first introduced,
representing a new
industry of fitness
focused wearables
Market
share of smartphones
reaches 77% of the
US mobile market
• Today, earbuds are packaged with all of the market leaders in smartphones, yet headphones still drive a $290 million dollar retail
industry, with 95% of new revenue growth focused on premium stereo headphone options
A HISTORY
RISE OF THE INDUSTRY
Investment
in hearable
technology jumps
150% to $31.2m
Hearables
are projected to be a
$5b industry,
realizing a market
void for fuller,
invisible integration
of smart technologies
into daily, mobile life

4. 4
Hearable devices present dual opportunities as sustaining innovations and as new-
market innovations, both advancing on current trends and adding new capabilities
and products to the market
DISRUPTING THE MARKET
CHRISTENSEN’S THEORY

5. 5
Cords
Headphones are connected via cables
which tangle, knot and encumber
Bulky
Most high quality headphones are
substantial in size and profile
No Audio Input
Many headphones lack a microphone
Limiting Use
Most headphones have extremely
limited applicability for exercise. They
are damaged by sweat, fall out easily
especially with higher impact activities
and cannot be used for aquatic activities
No Cords
Hearables eliminate the need for cords
entirely, allowing you to listen to music
without another device
Minimal
Sleek design makes them unobtrusive,
often unrecognizable
Enhance
Hearable devices not only play audio,
they provide value within the flow of
daily life without obtrusive form factor
Performance
Hearable devices take advantage of the
unique benefits of the ear, for accuracy in
measurement and use of sensors
USAGE
OLD VS NEW
Single Purpose Device
Headphones exist for one purpose: to
play music. This requires an additional
device for fitness tracking and
monitoring
Multi Purpose Device
Hearable devices exist to combine the
use of multiple devices (headphones
and fitness trackers) into one single
device.

6. 6
Inputs
Transformation
Workout:
• Heart-rate
• Pace
• Distance
• Music
• Body Temperature
• Accelerometer
Feedback
Workout:
• Actionable data
• Reporting Structure
• Tracking
Outputs
Workout:
• Instruction
• Sharing
• Data Playback
HEARABLE FEEDBACK LOOP
Lifestyle:
•Music
•Phone Calls
•Microphone
•Accelerometer
•Touch controls
•Geo-location
Lifestyle:
•Noise cancelation
•Stand alone
•On-board memory
Lifestyle:
•Sleek Design
•Navigation
•Music
•Hands free communication
•Optimization

7. 7
The Human Ear
Acceptance Streamlined Blood Flow Accuracy Waterproof Stability
BUSINESS VALUE
FEATURES
“When you want to make a wearable that you wear all
day long, it needs to be socially acceptable. And the best
way to make it socially acceptable is to make it invisible.”

8. 8
Dash by Bragi Freewavz Dot Trex Hearnotes
Retail Price
Smart?
Target Market
Key Features
Fiscal Profile
Availability
Mobile music consumers
Kickstarter
$325k
Still In Development
COMPETITIVE ENVIRONMENT
NEW AND EMERGING WIRELESS DEVICES
$299 $299 $149 $299 $349
Fitness and sporting Fitness and sporting Fitness and sportingFitness and sporting
Indiegogo
current
Fundable campaign
current
Kickstarter
$3.4m
Kleer TechnologyComfortSize and weightBluetooth
Waterproof
On-board memory
Indiegogo
current

9. 9
Headphones are an existing product.
Hearables are the next step
Product Synergy
American Apparel customers are
young, urban, trendy, active and
fully engaged with emerging and
dominant technology.
Demographic Overlap
Hands on experience will support
introduction of a new product
In-Store and Online
The cost of the product is high,
compared to other American
Apparel products. Hearables are
outside the existing American
Apparel brand
Risk
While hearables would be outside American Apparel’s model of vertical integration, this type of product should be considered for
cross-promotional opportunities. The demographic alignment and opportunity to introduce the next development in wearable
technology should be considered.
ANALYSIS AND RECOMMENDATION

10. 10
Introduce product line for early 2017,
right before the projected industry
peak
Timing
Hearables will simply be an
expansion on Walmart’s existing
lines of electronics. Offer
multiple hearable options to
support customer choice and
drive down UPC
Multiple Products
Hands on experience will support
introduction of a new product
In-Store and Online
Opportunity to lead the retail
market with new product
introduction, providing value to
Walmart’s current customer and
appeal to early adopters and
atypical Walmart consumers
Leadership
Walmart is already selling premium headphones, smartphones and several brands of wearables. These ear-oriented devices are
more than just variations on existing headsets. In-ear devices, powered by apps, will win over consumers, drawing new customers
to Walmart and positioning the company as forward focusing.
ANALYSIS AND RECOMMENDATION

11. 11
OPPORTUNITIES AND CHALLENGES
Price Point
The current generation of hearable
devices are projected to retail
between $150-$300, putting them in
the vicinity of smart phones and
tablets
Technology
The value of a hearable is entirely
contingent on the technology that
supports it, much of which is young.
Further expansion into apps and
integrations will enhance the value
Social
The social stigma against hearing aids
will be pitted against the social
ubiquity of earbuds. Social acceptance
is key for the mass appeal of any
wearable
Development
Hearables are still very much in
development and thus are subject to
substantial roadblocks before they are
available for sale. Timeframe is
unknown.
As with any new technology or product, there are risks to being on the cutting edge and leading early adoption

12. 12
Sources
• hkp://www.theverge.com/2015/9/6/9268495/bragi-dash-wireless-earbuds-hands-on
• hkp://www.wired.com/insights/2014/10/hearables/
• hkp://www.forbes.com/sites/anthonykosner/2015/08/12/hearables-face-off-starkey-halo-i110-vs-resound-linx²-leverage-iphone-and-apple-watch/
• hkp://techcrunch.com/2015/07/30/vcs-arent-hard-of-hearing-for-innovaoon-as-investments-for-hearables-surge/
• hkp://www.appcessories.co.uk/blog/wheres-the-bragi-dash-an-update/
• hkps://www.indiegogo.com/projects/dot-world-s-smallest-bluetooth-headset#/story
• hkps://www.fundable.com/hearnotes-staples
• hkps://www.indiegogo.com/projects/trex-truly-wireless-earphones#/story
• hkp://www.theverge.com/2015/7/31/9077719/bragi-dash-earin-Dot-ony-wireless-earbuds-date
•hkp://coolmaterial.com/roundup/history-of-headphones/
•hkp://www.bragi.com/
•hkp://staybasic.blogspot.com/2011/05/ch8-segmenong-and-targeong-markets.html
•hkp://www.slideshare.net/mcgronow/american-apparel-case-study
•hkp://readwrite.com/2015/10/27/hearables-wearables-components-technology
•hkp://techcrunch.com/2015/07/30/vcs-arent-hard-of-hearing-for-innovaoon-as-investments-for-hearables-surge/
•hkp://mashable.com/2014/05/13/wearable-technology-history/#JZGBPYf0nZq6
•hkps://www.kickstarter.com/projects/freewavz/freewavz-smart-earphones-with-built-in-fitness-mon/descripoon
•hkp://venturebeat.com/2014/10/21/why-hearables-will-trump-wearables-and-make-you-healthier-too/
•hkps://www.comscore.com/Insights/Market-Rankings/comScore-Reports-July-2015-US-Smartphone-Subscriber-Market-Share
• hkp://staybasic.blogspot.com/2011/05/ch8-segmenong-and-targeong-markets.html
• hkp://www.slideshare.net/mcgronow/american-apparel-case-study
• hkp://mashable.com/2015/11/30/apple-iphone-7-no-headphone-jack/?utm_cid=mash-com-t-main-link#Nfzgh7twqPqn