Sixteen percent of U.S. adults own a smartwatch

The latest figures out of NPD show a continued uptick in smartwatch sales, here in the States. The category has been a rare bright spot in an overall flagging wearable space, and the new numbers show gains pretty much across the board. In fact, the study puts smartwatch ownership at 16 percent among U.S. adults as of December — that figure is up from 12 percent a year prior.

Unsurprisingly, it’s a younger demo driving that growth — specifically 18-34-year-olds, where smartwatch ownership is around 23 percent. Of course, Apple and the like have been looking to increase purchases with the older crowd, courtesy of more serious health feature like last year’s addition of an ECG meter.

Apple, Samsung and Fitbit continue to dominate the market, making up 88 percent of the nearly $5 billion in sales tallied for the year ending in November. But companies like Fossil and Garmin made some marketshare gains. Google, naturally, will be looking to make a larger dent in the market, with its recent purchase of Fossil IP. Wear OS’s growth has been pretty flat, but that could change in 2019 with the rumored arrival of the Pixel Watch.

Fitbit’s newest fitness tracker is just for employees and health insurance members

Fitbit has a new fitness tracker, but it’s one that you can’t buy in stores.

The company quietly uncorked the Inspire on Friday, releasing its first product that is available only to corporate employees and health insurance members. The idea is to offer a fully subsidized wearable that helps the company dig deeper into the corporate and business worlds.

The new devices are available as a wristband with the option of a clip. The basic tracker’s features are pretty standard and include activity and sleep tracking, calory burn and alerts from a connected phone. A higher specced model includes heart rate tracking, GPS for fitness tracking and deeper analytics on sleep. No prices are displayed on the website, but eligible customers won’t need to pay.

In an interview with CNBC, CEO James Park said the company has 6.8 million users on wellness programs include Fitbit devices via employers, health plans or hospital programs. In offering the Inspire — which is Fitbit’s cheapest device yet — the goal is to grow that number further still. Indeed, Park said Fitbit is a named covered fitness benefit in 42 Medicare Advantage plans across 27 U.S. states while it is working with insurance firms like UnitedHealth.

It makes sense that Fitbit is moving into that space because the consumer market is a tough one. Wearables are no longer an early novelty and competition is fierce. Apple dominates at the high end with the Apple Watch — which has doubled down on health features — while, at the cheaper end, companies like Xiaomi and its partner Huami offer basic trackers from as little as $30.

Fitbit went public in 2015. While its share price rallied to $6.48 on Friday on this news, it is still down massively from its list price of $20 and first-day trading close of $29.68. Today the company’s market cap stands at around $1.6 billion.

In major TV push, China’s Xiaomi buys 0.5% stake in TCL

A veteran TV maker just got a notable refresh as it enters the age of connected devices. Xiaomi, the Beijing-based firm best known for budget smartphones, has bought 65.2 million shares, or 0.48 percent, of Chinese home appliance maker TCL, said TCL in a statement to the Shenzhen Stock Exchange on Sunday.

Shares of TCL, the world’s third-largest LCD TV manufacturer, jumped nearly 4 percent in morning trading on Monday, giving the company a market cap of $36 billion.

The financial gesture deepens an existing alliance between the duo. On December 29, the companies signed a strategic partnership that would see them collaborate on various fronts, including R&D in integrating smart devices with “core, high-end, and basic” electronic parts. To put in layman’s terms, the joint effort focuses on chips and will make it easier for TCL devices to incorporate into Xiaomi’s operating system, where an expanding universe of third-party gadgets reside. The partners may also make co-investments in the hardware field.

The tie-up provides “tremendous help” for Xiaomi as it ups the ante in home appliances, wrote Xiaomi founder and CEO Lei Jun on Weibo, China’s closest answer to Twitter, in a reply to TCL’s CEO Li Dongsheng. During the third quarter of 2018, smart TVs helped drive revenue growth for Xiaomi’s non-smartphone hardware segment, shows the company’s financial results.

“[Our partnership] helps facilitate the transformation and upgrade of China’s manufacturing industry,” wrote Li, whose company started in 1981 as a cassette manufacturer.

Xiaomi has long been keen to team up with manufacturers to make its own branded devices instead of producing them itself. By early 2018, Xiaomi reached nearly 100 such partners, many of which Xiaomi had invested in to harness bargaining power in the supply chain, from what a smartphone should look like to how much it’s priced at. Xiaomi’s retail stores — available online and in physical manifestations — have also opened doors to third-party brands in an effort to broaden product selection.

Xiaomi’s close ties with its ecosystem partners result in an inventory of affordable products rivaling the likes of Fitbit and Apple. During the third quarter of 2018, Xiaomi topped the global chart by shipping 6.9 million units of wearables. Apple and Fitbit came in second and third with 4.2 million units and 3.5 million units, respectively, according to market research firm IDC.

Xiaomi derives most of its revenues from smartphones, though Lei Jun has long envisioned a future in which internet services will be the firm’s main force. This segment, which Xiaomi has marketed as its key financial differentiator against other phone brands, includes sales from mobile games, internet finance, paid content among a slew of services available through Xiaomi’s connected devices.

Qualcomm Ventures is dedicating $100M to AI investments

Qualcomm Ventures, the corporate venture capital arm of the chipmaker, has plans to invest up to $100 million in artificial intelligence.

Specifically, Qualcomm says it will provide capital to startups building on-device AI, which is AI that runs on the end device, like a smartphone or vehicle, rather than in the cloud. The fund’s leader, Qualcomm investment director Albert Wang (pictured), says on-device AI is the future.

“Today’s AI processing is very computationally intensive,” Wang told TechCrunch. “When you’re talking to Alexa, nothing is processed on your device, it gets taken to the cloud and gets scrunched there. There are a few problems with that — performance deteriorates, it consumes a lot of bandwidth and there are privacy issues. Imagine you have an Alexa that is more private and user-friendly, you ask the questions and can get the answers instantly. It doesn’t take the round trip all the way to the cloud.”

Qualcomm has previously made AI investments out of its evergreen venture fund, including in SenseTime, a Chinese AI facial recognition company, and GM-acquired Cruise, which is building AI-enabled autonomous driving technology. The AI fund’s debut investment was in AnyVision, an AI startup based in Tel Aviv working on face, body and object recognition technology. Qualcomm participated in the company’s $28 million Series A funding round, which was led by Bosch in July.

The corporate VC typically hands out cash to 12 to 15 startups per year. As for the AI fund, it’s not sure just how many companies it will back, but says its investments will range between $5 million and $15 million per deal.

Qualcomm doesn’t typically set aside capital for specialized funds, opting instead to rally behind its evergreen flagship vehicle. The firm did, however, launch a digital healthcare fund, which deployed capital to Fitbit, among others, years ago. As for AI, Wang says they bring a pretty unique set of resources to the table.

“Qualcomm is very big on the mobile platform and it’s gaining ground in the IoT space, so there are a lot of tech partnerships we can provide, a lot of market insight we can provide from both the hardware and software perspective, and just given our exposure, in general, we have a pretty big portfolio of companies.”

Apple’s Watch isn’t the first with an EKG reader but it will matter to more consumers

Apple’s COO Jeff Williams exuberantly proclaimed Apple’s Watch was the first to get FDA clearance as an over-the-counter electrocardiogram (EKG) reader during the special event at Apple headquarters on Wednesday. While Apple loves to be first to things, that statement is false.

AliveCor has held the title of first since late last year for its KardiaMobile device, a $100 stick-like metal unit you attach to the back of a smartphone. Ironically, it also received FDA clearance for the Kardiaband, an ECG reader designed to integrate with the Apple Watch and sold at Apple stores and just this week, the FDA gave the go ahead for AliveCor’s technology to screen for blood diseases, sans blood test.

However, the Apple Watch could be the first to matter to a wider range of consumers. For one, Apple holds a firm 17 percent of the world’s wearables market, with an estimated shipment volume of 28 million units in just 2018. While we don’t know how many AliveCor Kardiaband and KardiaMobile units were sold, it’s very unlikely to be anywhere near those numbers.

For another thing, a lot of people, even those who suspect they have a heart condition, might have some hesitations around getting a separate device just to check. Automatic integration makes it easy for those curious to start monitoring without needing to purchase any extra equipment. Also, while heart disease is the number one killer in the U.S. and affects a good majority of the global population, most of us probably aren’t thinking about our heart rhythm on a daily basis. Integrating an EKG reader straight into the Watch makes monitoring seamless and could take away the fear some may have about finding out how their heart is doing.

Then there’s the Apple brand, itself. Many hospitals are now partnering with Apple to use iPads and it’s reasonable to think there could be some collaboration with the Watch.

“Doctors, hospital systems, health insurers, and self-insured employers don’t want to manage separate partnerships with each of Apple, Xiaomi, Fitbit, Huawei, Garmin, Polar, Samsung, Fossil, and every other wearable manufacturers. They need a cross-platform product that works for all of their patients,” Cardiogram founder and EKG researcher Brandon Ballinger told TechCrunch. “So if Apple becomes the Apple of healthcare, then a company like Cardiogram or AliveCor can become the Microsofts of this space.”

How does this announcement from Apple affect AliveCor? CEO Vic Gundotra shrugs it off. He tells TechCrunch the vast majority of AliveCor’s business is from KardiaMobile, not it’s Apple-integrated ECG reader. “Apple has long alluded they were building something like this into the device,” Gundotra said, “so we’ve been anticipating it.”

With Charge 3, Fitbit blurs the smartwatch line

Fitbit’s ability to start righting the ship can largely be credited with its dive into the smartwatch category. Ionic was a bit of a mess, to be sure, but the Versa has proven a bona fide hit. But while smartwatches represent a rare bright spot in the stagnant wearable space, fitness bands have always — and will continue to be — Fitbit’s bread and butter.

The Charge is Fitbit’s workhorse. The unassuming tracker has sold well for the company, with the Charge 2 accounting for 15 million of the total 35 million the Charge line has sold.

Announced a full two years after its predecessor, the Charge 3 maintains the core competencies that helped make the line a success for the company, while baking in functionality that finds it further blurring the line between tracker and watch.

And why not? Fitbit is quick to cite its own survey of recent potential wearable buyers. Indeed, 42 percent told the company they wanted a tracker and 38 percent said they were edging toward a smartwatch. Size, price point and simplicity are among the primary drivers in that decision making — and the Charge 3 certainly has the Versa beat on those points.

In a meeting held prior to the official unveiling, a rep for the company said, “it truly is the Ferrari of trackers.” Not sure I can get on board with that one. Maybe it’s the Honda Civic. It’s reasonably priced at less than $200, dependable and built to last. Once again, the leaks were pretty much spot-on here. The top-level improvement here is the addition of a Gorilla Glass OLED touchscreen display that’s 40 percent larger than the Charge 2.

The design language hasn’t changed too much from its predecessor, though Fitbit’s made the band much easier to take off and put on, and added a whole bunch of different bands, including perforated sports models and woven straps, so there’s plenty of choice on that front. The battery has been improved. The claim has been bumped from a nebulous “several” days to seven.

GPS, as expected, is nowhere to be found, however. You’ll need to rely on your phone for that sort of tracking.

Fitbit’s added a bunch of what it calls “smart features” on the software side. The company introduced a bunch on the smartwatch side of things, so why the heck not, right? It might risk cannibalizing Versa sales slightly, but while the lines have been further blurred, the two still present fairly distinct categories, so far as most consumers are concerned.

The Charge 3 pops up notifications from popular apps like Facebook and Uber and lets users accept or reject calls. Those with Android will be able to choose canned message responses, as well. Fitbit’s ported a bunch of its own apps, including Alarms, Timer and Weather, with Leaderboard and Calendar coming in a future update. Third-party apps will be available, as well, though Fitbit hasn’t announced those yet.

Fitbit Pay, meanwhile, has finally made the leap onto the band, after it debuted on the smartwatch front, so you can theoretically leave the wallet at home while going for a run. That said, there’s no music control here yet, though the company says it’s working on it. Giving their buddy-buddy relationship with Deezer, I’d expect that to be arriving soon.

Fitness tracking has been improved throughout with more than 15 exercise modes. The physical button has been swapped out for an inductive one, helping make the device water-resistant up to 50 meters — and, yes, swim tracking is on board, as well. Female fitness tracking will get further updated in a future release to include ovulation. There’s also a beta version of Sleep Score, which is designed to give you more insight into your night-time habits and, I suppose, gamify sleep.

The company’s got a lot of lead time on all of this, as the device won’t be hitting store shelves until October. It will be priced at $150 for standard and $170 for a Special Edition with NFC and two bands.

Foundry Group quietly announces a big fat $750 million fund

Foundry Group, the Boulder, Colo.-based venture firm co-founded 11 years ago by startup whisperer Brad Feld, has raised a $750 million seventh fund to target early-stage and growth-stage companies, as well as to invest in other venture funds.

It sounds like — and is — a lot of money, though the firm notes that it encompasses all of its various investment strategies, whereas its last fund, a $500 million vehicle that it closed in 2016, was used to invest in other venture funds and growth-stage companies alone; Foundry was separately managing its early-stage bets in a different fund.

It’s a little confusing, but if you really want to know the details, Feld breaks them out in a post:

For historical reference, our early-stage funds (FG 2007, FG 2010, FG 2013, and FG 2016) are all $225 million in size. Our first early growth fund raised in 2013, Foundry Group Select, is also $225m in size. In 2016, when we raised Foundry Group Next, we approximately doubled the size of that fund to $500 million since 30% of it was going to be invested in partner funds and 70% in early growth. So, at the beginning of 2016, we effectively raised $725 million (FG 2016 and Foundry Group Next). Foundry Group Next 2018 is simply the combination of those two funds rounded up slightly.

Foundry was founded by Feld, Ryan McIntyre, Jason Mendelson and Seth Levine — “four equal partners,” as Feld describes them.

With this newest fund, he says, Foundry now has “seven equal partners,” meaning each receives the same amount of carry — or profits from the firm’s successful investments — no matter that three of the partners are newer to the table.

Foundry’s newer partners include Lindel Eakman, who joined in 2015 to help Foundry identify venture funds in which to invest. (Very meta, we know.) Eakman had previously spent 13 years with the University of Texas Investment Management Company (or UTIMCO), which was Foundry Group’s largest investor.

The firm last year also added Chris Moody, who’d been the CEO of Twitter data reseller Gnip before Twitter acquired the company in 2014 and made Moody a GM and VP of its data and enterprise business. (Foundry was an investor in Gnip.)

The firm’s newest partner is Jamey Sperans, who was as an early member and managing director of Morgan Stanley Alternative Investment Partners, where he served on the global investment and executive committees. Sperans, who joined earlier this year, has also founded five companies over the years.

In case you are wondering, yes, that is seven men. (Just remarking.)

Foundry has had at least 44 exits over the years, according to Crunchbase. Among its most recent wins: the email service provider SendGrid, which staged a successful IPO last November; and the 2015 IPO of Fitbit, the wearable device company, whose shares are trading at roughly $5.50 apiece right now but were as high as $47 in the months after the offering.

Among Foundry’s newest investments is Chowbotics, a four-year-old, Redwood City, Calif.-based company that makes a salad-making robot and raised $11 million in Series A-1 funding last month; and Sensu, a year-old, Portland, Ore.-based full-stack monitoring platform that raised $10 million in Series A funding back in April.

It has also re-upped in plenty of its portfolio companies in recent months, including Urban Airship, an eight-year-old, Portland, Ore.-based company behind a digital customer engagement platform. In June, it raised $25 million in Series F funding led by Foundry, which had also led the company’s Series B round in 2010.

Fitbit employees charged with stealing Jawbone trade secrets

Six current and former Fitbit employees have been hit with a federal indictment over the theft of trade secrets from one-time rival, Jawbone. All had worked for Jawbone for at least a year between 2011 and 2015, before jumping ship and getting hired by the company’s chief competitor.

The allegations have been floating around for a while. Look, we even made a graphic for the stream of allegations being lobbed back and forth between the wearable makers.

Shortly before Fitbit’s 2015 IPO, Jawbone filed a suit alleging that Fitbit had attempted to recruit nearly a third of its employees. The suit was seemingly resolved late last year, however, through a global settlement between both parties.

“In a trade secret misappropriation case brought by Jawbone in the International Trade Commission in 2016 that involved these same individuals,” Fitbit said in a statement given to TechCrunch this morning, “a federal administrative law judge during a nine-day trial on the merits found that no Jawbone trade secrets were misappropriated or used in any Fitbit product, feature or technology.”

Jawbone, of course, has since fallen on tough times. The company was liquidated roughly this time last year, as CEO Hosain Rahman set out to create a related health startup. As far as the DOJ was concerned, however, the story isn’t finished just yet.

“Intellectual property is the heart of innovation and economic development in Silicon Valley,” Acting U.S. Attorney Alex Tse told MarketWatch “The theft of trade secrets violates federal law, stifles innovation, and injures the rightful owners of that intellectual property.”

Update: Rahman has provided TechCrunch the following statement,

We believe the Justice Department’s indictment of six current and former Fitbit Inc. employees for stealing trade secrets from their former employer, Jawbone, validates the claims we made in our 2015 lawsuit against Fitbit . On behalf of former employees, investors, suppliers and others associated with Jawbone, we look forward to seeing justice take its course in this case.

Fitbit beats revenue expectations slightly, but tracker sales are still down

Fitbit scored a small coup on earnings this week, ever so slightly beating revenue expectations for the quarter. The company pulled in $247.9 million, up over Wall Street’s expected $247.3 million. Of course, that’s still a notable drop from this time last year, when the company pulled in $298.9 million.

The numbers are down as the overall fitness tracking category has declined, and the company sold 2.2 million devices in the quarter, missing analyst expectations of 2.33 million. Fitbit has adjusted its second quarter revenue expectation, accordingly. “We expect results to be impacted by the reduced demand by the channel for trackers, partially offset by an increase in smartwatch revenue, driven primarily by Versa sales,” the company wrote in a release announcing earnings. “We expect smartwatches to grow as a percentage of revenue, but our overall mix to continue to be skewed towards trackers.”

That’s in line with the company’s overall strategy over the past year, which saw a marked shift into the world of smartwatches — a rare overall bright light in the fitness wearable space, thanks in large part to the success of the Apple Watch. Fitbit has invested a good chunk of change in acquisitions, resulting in the release of the Ionic and Versa. And given the devices’ higher per unit price, the company ultimately has to sell fewer to maintain revenue. 

The release mostly glosses over the existence of the Ionic, save for a mention of the fact that the device was announced in the past year — and that it helped reduce “development hours by around 45-percent on the Versa.” That makes perfect sense, of course — the hard work of incorporating all of its recent acquisitions and distilling all of those learnings into a hardware and software offering were mostly accomplished with the Ionic.

The point of all of that being that now Fitbit knows how to make a smartwatch, so doing so in the future should be less resource-intensive, moving forward. That will likely come in handy as the company seems poised to invest more and more of its resources into its growing healthcare sector.

Fitbit stock jumped recently, courtesy of its announced partnership with Google, which will help make health info tracked on its devices more easily accessible by doctors. There is, of course, plenty of money to be made in the healthcare sector, but Fitbit is going to have a bit of an uphill battle getting providers to take its offerings more seriously as medical devices.

“We continued to deepen our relationship with our users, investing in software and services that deliver on our promise of helping people achieve better health outcomes,” CEO James Park said in a release tied to the earnings. “To this end, we closed the acquisition of Twine Health and, most recently announced a long-term collaboration with Google that will accelerate innovation in digital health and wearables.” 

The Skagen Falster is a high fashion Android wearable

Skagen is a well-know maker of thin and uniquely Danish watches. Founded in 1989, the company is now part of the Fossil group and, as such, has begin dabbling in both the analog with the Hagen and now Android Wear with the Falster. The Falster is unique in that it stuffs all of the power of a standard Android Wear device into a watch that mimics the chromed aesthetic of Skagen’s austere design while offering just enough features to make you a fashionable smartwatch wearer.

The Falster, which costs $275 and is available now, has a fully round digital OLED face which means you can read the time at all times. When the watch wakes up you can see an ultra bright white on black time-telling color scheme and then tap the crown to jump into the various features including Android Fit and the always clever Translate feature that lets you record a sentence and then show it the person in front of you.

You can buy it with a leather or metal band and the mesh steel model costs $20 extra.

Sadly, in order stuff the electronics into such a small case, Skagen did away with GPS, LTE connectivity, and even a heart-rate monitor. In other words if you were expecting a workout companion then the Falster isn’t the Android you’re looking for. However, if you’re looking for a bare-bones fashion smartwatch, Skagen ticks all the boxes.

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What you get from the Flasterou do get, however, is a low-cost, high-style Android Wear watch with most of the trimmings. I’ve worn this watch off and on few a few weeks now and, although I do definitely miss the heart rate monitor for workouts, the fact that this thing looks and acts like a normal watch 99% of the time makes it quite interesting. If obvious brand recognition nee ostentation are your goal, the Apple Watch or any of the Samsung Gear line are more your style. This watch, made by a company famous for its Danish understatement, offers the opposite of that.

Skagen offers a few very basic watch faces with the Skagen branding at various points on the dial. I particularly like the list face which includes world time or temperature in various spots around the world, offering you an at-a-glance view of timezones. Like most Android Wear systems you can change the display by pressing and holding on the face.

It lasts about a day on one charge although busy days may run down the battery sooner as notifications flood the screen. The notification system – essentially a little icon that appears over the watch face – sometimes fails and instead shows a baffling grey square. This is the single annoyance I noticed, UI-wise, when it came to the Falster. It works with both Android smartphones and iOS.

What this watch boils down to is an improved fitness tracker and notification system. If you’re wearing, say, a Fitbit, something like the Skagen Falster offers a superior experience in a very chic package. Because the watch is fairly compact (at 42mm I won’t say it’s small but it would work on a thinner wrist) it takes away a lot of the bulk of other smartwatches and, more important, doesn’t look like a smartwatch. Those of use who don’t want to look like we’re wearing robotic egg sacs on our wrists will enjoy that aspect of Skagen’s effort, even without all the trimmings we expect from a modern smartwatch.

Skagen, like so many other watch manufacturers, decided if it couldn’t been the digital revolution it would join it. The result is the Falster and, to a lesser degree, their analog collections. Whether or not traditional watchmakers will survive the 21st century is still up in the air but, as evidenced by this handsome and well-made watch, they’re at least giving it the old Danish try.