Ann: Offer Document, page-5

Humanity’s relatively recent addiction to music and particularly loud music is leading to a major future problem. Hearing loss is set to be the new diabetes. In a recent report the World Health Organisation (WHO) estimated that around 1.1 billion young people under the age of 30 are at serious risk of hearing loss because of their levels of sound exposure. Although not as medically debilitating as diabetes, the prospect of billions of people having hearing difficulties when they still have thirty years of working life will have profound effects both in the workplace and society in general.

"Unprotected technology"




"Unable to assure big players could do the same thing and much more cheaply"

The key requirements here are understanding comfort (fit in the ear), audio processing to “improve” the acoustic environment with noise cancellation and sound enhancements and finally, battery life.

They also need to be fashionable, as hearables will not succeed if the public continues to see them as just hearing aids. It’s a set of skills which are uncommon. Some sit within the hearing aid industry, but others lie outside the medicalised environment and supply chain into which that industry has locked itself. As a result, disruption is most likely to come from companies with experience in this market, but a wider understanding of where consumers are going.

Making these devices is not simple, as all of the crowdfunded projects have discovered. Most of the component features are challenging, from wireless to miniaturisation to battery life and power consumption. These are challenges which suggest we will see most success from companies with prior experience in these areas, not naive startups with no background in the industry.

Wireless earbuds are only just about to arrive on the market. It’s difficult to predict how well the first few will perform and how soon the market will grow. If well received, it could be explosive. Existing consumer and hearing aid brands will almost certainly join in if they perceive it as successful, but will have to contend with extended development times to catch up. Existing hearing aids are optimised for sub‐miniature zinc air batteries. That means they are not easily repurposed to support the new features of hearables. Other companies have a similarly long learning curve to understand the ear and the audio processing requirements. As a result, some of the early disrupters may well end up as acquisition targets.

"Not yet identified a manufacturer."

KWA is proud to be a partner in the development of these game changing in-ear wireless "Hearables".

http://www.kwadesign.com.au/about/

"If this is good why are they listing?"

Sensear has revenue of 35 million, profit of 5 million based on my research. It is a privately held company. Sensear has industrial applications, Nuheara is targeted at retail consumers.

A key challenge for disruption is to break the existing hearing aid supply chain, which means removing the need for the audiologist. Today the audiologist is the gate‐keeper for hearing aids in most of the Western world. They have little internet in software or tools which would allow users to set up their own hearing aids, as that would threaten their business. However, the capabilities which are going into the new generation of hearables, along with phone apps and cloud analytics could perform as good a job for the majority of users with hearing loss.

Hearables companies that design their products with this capability will be in a strong position to disrupt the market. The trick is probably to make this an extension of everyday ambient sound curation. That allows users to buy the hearable as a consumer product and then check their hearing “because they can”. If that works well, it provides a seamless journey into using it as an Assisted Listening Device, potentially ten years before they might consider having a hearing test for a hearing aid. Once won, the customer will probably never be lost. Moreover, they are likely to update their device at a normal consumer replacement cycle, which is two or three time more frequently than that of a current hearing aid. If that happens, the potential for growth from 2020 onwards is enormous.

Even without challenging the hearing aid industry, the wireless ear bud will evolve into an important market in its own right. The projections for 2020 shipments only account for connections to around 0.5% of smartphones. Whilst the price point for hearables will never match that of wired earbuds, it will fall, making it an increasingly desirable option over time, with significant growth after 2020. As a result it will become one of the most successful areas within the wearables market.

Nick Hunn
WiFore Consulting
August 2015