An article written by Jérôme Azemar, Project Development Director at Yole Développement (Yole) – On the 12th of September Apple released its latest smartwatch, the Apple Watch Series 4. Since then, the industry has been quite excited, and articles have flourished describing the item as a revolution in the medical devices market, starting a new era of wide adoption and large acceptance by consumers. The Apple Watch has indeed raised a lot of interest in recent months, but can we call this a disruption?
First of all, is it a medical device and can it really support physicians in their work? This point is arguable as the use case is not perfectly clear from a medical perspective… Indeed, Apple Watch has two main capabilities that could be linked to user health, falling detection and ECG monitoring, but neither has clearly been used by physicians so far. The business model is not clear with no partners claiming use at the moment (whether hospitals, institutes or insurance). While falling detection possibly has an immediate application as the watch directly calls for emergency support in case of a dangerous fall, ECG has yet to create its use case despite Apple promoting it as an important asset. Indeed, regular ECG monitoring is helpful in case of atrial fibrillation, but it is a real concern essentially for elderly people, not really the main target of the Apple Watch. Nevertheless, Apple got its device qualified by the US FDA which indicates that its data is reliable and can be used by physicians.
Alright then, Apple watch is officially useable as a medical device and is the first smartwatch with ECG to be FDA qualified… But is it really changing the market so much? If you look at the current landscape and technical capabilities of smartwatches in general, it can be seen as an evolution but, again, with some questions associated. First, how does it work? The back of the Watch measures your heart rate on your wrist and when you touch the Digital Crown with a finger from your opposite hand the circuit is complete. It then starts monitoring. It is interesting to note that other watches had heart monitoring capabilities in the past, but not at the level of performing a real ECG as they lacked an embedded electrode to enable a circuit measurement. That said, they can be used as medical devices only if they get approval from medical practitioners. So even if we consider FDA approval as the major added value because it guarantees the data results to be accurate and useable by physicians, there are still some limitations expected. Other smartwatches received such qualification upfront for different applications, such as Philips Health Watch or Omron Watch, and still the consumer market did not transform to as large a pool for medical monitoring as some expected.
How then should we analyze the situation? Well, it is more an illustration of a potentially important trend than a disruption. In recent months, Apple showed signs of strategy orientation toward the medical market: hiring multiple engineers from that field (such as Sumbul Desai, executive director of Stanford’s center for digital health), filing patents on medical applications, etc… That move to get FDA approval is another step to get Apple on track for new markets in medical apps.
What will make the difference and create a business out of it for Apple? It is probably going to be linked to the data. The main difference between Apple and the other wearable makers that got FDA approval, such as Philips, is the fact that Apple is a consumer-oriented company, not medical, and therefore it can reach, and already has, a very large number of customers. With such scale, the data collected could be extremely valuable in medical applications, as soon as the know-how and software capabilities to handle so much information is developed. It is questionable how physicians could deal with such a large amount of data if each patient came to them individually, but it all comes down to the correct applications, and we feel that Apple is in a good position getting ready to create them.
What exactly will they do with the data? It is not clear yet. Even though this Apple Watch does not give many answers, it does, however, pave the way for Apple in the future with other applications in future products (glucose monitoring to support diabetes care, for instance). This positions Apple in the medical wearable sphere waiting for the business model to be developed. And they are not the only ones to feel optimistic about this market… We anticipate a CAGR of 25% in the coming 5 years and we think in 2022 half of all consumer wearables will be medical!
With this product release Apple brings more questions than answers, but it has made an interesting move and other consumer giants will have to define their strategy in this market. The next generation of products will for sure bring more!
Notes: ECG: Electro Cardio Graph – FDA: Food and Drug Administration – CAGR: Compound Annual Growth Rate
Image: Source: Apple
About the author: As Project Development Director at Yole Développement (Yole), Jérôme Azémar is supporting the development of strategic projects, following leading customers of the company within the semiconductor industry, from manufacturing to packaging. His mission is to develop Yole’s business and technical knowledge in the industry, maintain long term relationships with its accounts and meet their expectations.
Jérôme is a member of Yole since 2013 and worked as a senior analyst, managing the day to day production of technology & market reports as well as custom consulting projects. He also deeply contributed to the business development of the Advanced Packaging & Semiconductor Manufacturing activities.
Jérôme is the author of numerous analysis and international publications covering advanced packaging, power electronics and semiconductor manufacturing. He is also regularly involved in international conferences, giving presentations, delivering keynotes, as well as organizing committees.
Along his career, Jérôme has developed a large network in the industry, being in touch with CEOs, CTOs, Marketing Managers, Business Development Managers…
Prior to this and upon graduating from INSA Toulouse (France) with a Master’s in Microelectronics and Applied Physics, Jérôme joined ASML and worked in Veldhoven (The Netherlands) for three years as an Application Support Engineer specializing in immersion scanners. During this time, he acquired Photolithography skills which he then honed over a two-year stint as a Process Engineer at STMicroelectronics (France).
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