Athos Athletic Wearables-Phase 1

By: Elliot Mar, Ray Ablao, Phillip Lam, Ariana Wong, and Paul Gabriel

For many years, the global populace has become accustomed to eating fast food and

living with what current consensus would deem an unhealthy lifestyle. Processed foods and a

sedentary lifestyle have led to a large increase in obesity, a higher incidence of diabetes, and an

increased risk of cardiovascular disease (“Cardiovascular Disease and Diabetes”). In recent

years, a health trend has emerged, with many people choosing crossfit, triathlons, martial arts,

team sports, and many other activities to stay fit. This desire to be fit and healthy has coincided

with the aspiration to get better with every workout. In order to improve, athletes, professionals

and amateurs, have used different metrics to set benchmarks and milestones for improvement.

While some are useful, many metrics simply do not serve as a reliable benchmark between

individuals due to the vast differences in body structure and athletic potential. In 2012, Athos

Athletic Wearables were introduced into the market with an innovative way to measure athletic

performance and encourage improvement for all types of exercise.

With a mission statement striving to “help people train more effectively to reach their

fitness goals,” Athos’ core product features a proprietary electromyography sensor, or EMG

(Dorbian). This technology was only previously accessed by elite sports performance institutes,

research labs, and collegiate/professional athletes due to its high cost (“Athos- Wearable Tech”).

The EMG is worn in smart training apparel, in the form of sweat wicking compression shirts and

shorts. While worn, the Athos EMG monitors your body’s biosignals, and translates the

information gathered into simple, actionable advice. The information is sent to the Athos app for

iOS, where it is analyzed and displayed for the athlete on a simple user interface. This

information is then used by the athlete to tailor their workout to specific muscle groups, or to

shore up asymmetries in muscle strength throughout their bodies (“Athos- Wearable Tech”).

We would assess the current category of wearable technology as early in the Growth

Market Phase. According to the research firm Gartner, the wearables market is set to explode

from 0.1 million shipments in 2015 to a robust 26 million shipments in 2016 (Goode). We

anticipate that Athos will rely on the Bass Diffusion Model to increase product adoption among

users (Exhibit 1). This places great importance on forging strategic partnerships with influential

individuals and organizations, using them as product champions to vouch for the product’s utility

to the masses.

Recently, the Golden State Warriors organization won their first NBA championship in

40 years, largely due to their use and support of wearable technology and advanced analytics. By

monitoring levels of fatigue using wearable technologies in practice, the Warriors were able to

use a preventative approach to stave off injuries late in the season and ultimately raise a

championship trophy for the 2014-2015 season (Leung). In the 2015-2016 season, the Warriors

formed a partnership with Athos to be the primary wearable technology used in practice. The

Warriors first used Athos with their NBA Development league affiliate, the Santa Cruz Warriors

(Leung). After beta testing the wearables, owner Joe Lacob invested in the B round of Athos, just

before their product rollout (“Athos”). The Warriors’ commitment to wearable technology has

paid dividends once again, as the franchise set an NBA record of wins in a single season with a

record of 73-9.

The Athos product item, product line, and product line length stand at 1, with their only

product as a wearable suit with sensors. Each piece of their product can be ordered separately, in

case athletes wish to purchase an extra EMG, compression shirt, or compression shorts. The

wearable category in which Athos participates is early in the growth market phase of the

Category Life Cycle (Exhibit 2a). More specifically, Athos’ product is currently participating in

the technology adoption life cycle prior to the major traction needed as the product reaches the

mass market in the growth market phase (Exhibit 2b).

According to the Director of Market Strategy, Athos’ value proposition centers around

showing users if they are using the appropriate muscles, to the right extent, and in the correct

sequence to evaluate the user’s performance and suggest improvements. It is different from other

devices because most other products provide different forms of an accelerometer, which display

data without insight or feedback that the user can act on. Athos is different because it provides

answers and insights that each user can apply and incorporate to reach their fitness goals. Athos

wearable suit sets itself apart by focusing on being great workout apparel first and fitting the

technology in second.

Partnerships with professional athletes during offseason training include Karl Anthony-

Towns, Chris Johnson, Eric Hosmer, and Clay Matthews (Favorito). Recently, top NFL

prospects have begun forming partnerships with Athos in order to measure their performance to

improve in the long run. Even some entire sports teams have begun to adopt wearable technology

at private practice sessions, including some European soccer clubs, Australian institutes of sport,

and the previously mentioned NBA champion Golden State Warriors (Favorito).

Athos provides hardware that measures biosignals that its competitors do not, effectively

separating it from its competition. Its proprietary EMG hardware has the distinct ability to

measure muscle exertion by region of major muscle groups in the body, and advises the user to

tailor their workout to either maintain, tone, or build muscle by region based on the intensity of

the current workout (“Athos- Wearable Tech”). Other wearables have historically measured heart

rate, blood pressure, steps, and vO2 levels. None have been able to break down exertion by

muscle group and give information in real time while the athlete is training.

Although Athos is currently differentiated from its competitors as a first mover in EMG

technology, Cityzen Sciences of France has utilized similar technology and formed partnerships

with its own local investment banks, constantly designing new smart fabrics and miniaturizing

sensors to be a leader in the smart fabric industry (“Cityzen Sciences”). Athos will have to speed

up its adoption amongst the global market and scale their manufacturing to meet the rise in

demand. In order for Athos to obtain and maintain a sustainable competitive advantage, they

must also address the issue of imitability. A few new entrants have started to utilize the same

technology (“Devices”). Although not used in the same manner, the article reveals that the

technology can be imitated or used by competing firms. Therefore, they will have to innovate

constantly to maintain their lead in the market and garner brand awareness. In this light, we

assess their current competitive advantage to be short term and unsustainable, eventually leading

to a competitive parity if proactive steps are not taken to sustain it. Although they don’t currently

possess a sustained competitive advantage, they are on the right path as depicted in our Strategy

Diamond (Exhibit 3). All components of the strategy diamond work in synergy, reinforcing the

cohesiveness of Athos’ overall strategy. For example, their staging is deployed at a slow,

deliberate pace so they can develop internally and really focus on the quality and utility of their

product, which aligns with their economic logic of charging a premium price for better product

features.

Innovation Analysis

Athos is a round C start-up which has raised approximately $50 million since their

creation in 2012 (“Athos”). They are in the smart wearable space, specifically in the biometric

apparel market segment. They currently offer an integrated hardware and software solution to

track biometric signals in real time.

According to the Booz Allen and Hamilton framework, the Athos product would be

categorized as a “New-to-World Product”, since it ranks high in both newness to market and

newness to the company. Athos is a new to world product as they are taking their first product to

market. Though the technology of their EMG and high performance athletic garments are not

new innovations, the incorporation of these two technologies exposes a new market in the smart

wearable space.

Referring to Ansoff’s framework, Athos’ introduction of their product constitutes a

diversification strategy by entering a new market with a new product. The idea of wearable

devices being extended into apparel is one of product diversification with the goal of entering a

much bigger market than what was already penetrated. The market certainly already exists, and

is expected to grow from 0.1 million shipments in 2015 to 26 million shipments in 2016

(Goode).

Though the Athos’ product is categorized as a smart wearable, it does not yet serve as a

substitute or replacement for existing wearables. It simply augments a current market, granting

users the ability to monitor biosignals in real time for athletic improvement. The most innovative

component of Athos’ offering is that they have made state-of-the-art electromyography (EMG)

technology available for mass market consumption, albeit at a premium price.

Utility Analysis

Smart wearable sales (units) worldwide are forecasted to increase by 18.4% from 2015 to

2016 and this market is estimated to be $28.7 billion dollars and poised to grow YoY at an

average of 17% for the next 3 years (“Gartner says Worldwide Wearables”). Competition within

this space is fierce resulting in organizations seeking a sustainable competitive advantage either

through technology or partnerships. Athos has a series of direct and indirect competitors (Exhibit

4). This report will focus on direct competitors OMSignal and Hexoskin, and indirect competitor

UA HealthBox. The buyer’s utility map will illustrate areas where Athos is operating at its best

and where it can improve in order to remain competitive (Exhibit 5a,b).

Athos buyer’s utility position against its direct competitors is favorable in the use stage.

In this area the business dominates competition by providing a reliable, accurate, real-time

fitness metrics which have been proven to improve athletic performance as seen with the Golden

State Warriors (“NBA team adopts”). Areas where Athos can improve are in the pre-purchase,

purchase, and delivery stages. The lack of marketing effort is resulting in low brand awareness.

This is an opportunity for Athos to educate the public about its product, benefits, and how to use

it. Another stage where Athos can improve is in supplementation as it pertains to technology.

Since Athos currently only supports iOS devices, there is an opportunity to capture users of

other mobile devices such as Androids and tablets.

OMSignal

One of Athos’ direct competitors, OMSignal’s mission is “to bring personal wellness into

our daily lives” (“OMSignal About Us”). This organization offers a smart garment that measures

the usual suspects such as distance, calories, cadence, breathing, exertion, and VO2 Max. Unlike

Athos, OMSignal requires hardware other than its garment, namely the box. It is a combination

of these two items and a mobile app that creates their value proposition - A comfortable smart

wearable to bring analytics to your endurance and fitness training regime (“OMSignal Bra”). The

key weakness for this business is their product development life cycle. It spent 3 years and 1633

prototypes to bring the OMSignal bra to the market (“OMSignal Bra”). The key strength for

OMSignal is its growing ecosystem in partnerships, specifically its OEM business. Recently,

OMSignal partnered with Polo apparel to deliver Polo’s first smart t-shirt. A SWOT analysis is

included on OMSignal (Exhibit 6).

HEXOSKIN

Hexoskin, another direct competitor, is an engineering and research focused company.

This is noted by their product line offerings of both the smart wearable hardware and

complementing software in the form of mobile apps, as well as a webapp. Hexoskin further adds

value by developing their product as a platform, offering an open API that enables users to

import and export data logged by the Hexoskin hardware (“Indiegogo”). This allows users and

researchers to process and translate the data in their own data visualization and analysis software.

Their platform is optimized to sync up with third-party fitness apps and wearables on the market

now. This open platform approach gives a huge advantage over competitors, because now they

don't have to develop new software themselves. Look and feel of their interface could drive

users away, and their web design should be catered more toward their target audience. Refer to

Exhibit 7 for SWOT analysis.

Under Armour (UA) HealthBox

Although the UA HealthBox is presently considered an indirect competitor, we believe it

to be a potential primary competitor and a viable threat to Athos (Exhibit 8). This is because UA

is a relatively large brand compared to Athos and its direct competitors, boasting a large quantity

of effective marketing content via their website. Their buyer experience is streamlined, and the

wearables fit well into their current product offerings in other segments.

UA is much larger in terms of revenue, user base, and resources than any of the aforementioned

competitors, including Athos. Presently, UA has yet to release a smart garment to directly

compete with Athos. However, once this product comes to fruition and hits the market, UA’s

competitive advantage will be having all the necessary tools to scale and push rapid adoption.

UA’s buyer utility map reflects it’s clear advantages in the pre-purchase and supplement stages

of the buyer experience (Exhibit 5b). We see UA as a legitimate threat of becoming the go-to

partner for fitness wearables and fitness analytics.

Under Armour HealthBox seems to be the beginning of a comprehensive ecosystem of

products UA plans to develop in this space. Right now they’re focusing on heart rate, sleep,

intake and output monitoring, but they are likely building a foundation for more wearable tech.

With their huge market share of athletic footwear, it’s not hard to imagine that UA will be among

the first to release the newest line of next generation smart wearables including, apparel and

footwear. An in-depth competitive product analysis is included in our exhibits (Exhibit 10).

Opportunities

By analyzing the competitive space of fitness wearables in entirety, we have come up

with a viable opportunity for Athos to change the utility of the product. Our buyer utility maps

reveal those areas in which Athos can innovate. One sweet spot in particular is where the post-

purchase buyer stage intersects the fun/image utility. Athos can target this area by integrating

with their current partners/investors to create a fitness ecosystem that other users can sync to in

order to compare workouts, watch fitness videos, post content, and connect with their favorite

athletes (ie the Golden State Warriors), essentially creating a social media strategy which will

increase brand awareness for their product. Along those lines, Athos can utilize their platform to

personalize the experience. Users could be able to input their specifications including height,

weight, previous workout history, etc. With this information, the app would create specific

workouts to fit each athlete’s fitness goals.

Critical Issues

During the next 12 months of the product’s life cycle, Athos faces critical issues that can

be put into two categories. The first category is comprised of issues that the product marketer

must resolve and the second contains issues that pertain to the product manager. The former is

more intuitive as marketing issues are seemingly easier to detect. The product marketer will need

to place a high importance on scaling their operations first in order to fulfill pre-orders, then

focus on increasing adoption of the products. For the smart wearable industry, education is key.

Since Athos’ target market is all athletes that are concerned with fitness, it is vital that they take

the time to explain the product, namely its uses, how the technology works, and why it is

important as many of these consumers haven’t been fully exposed to the concept.

From a product management standpoint, further refinement and improvement of both the

Athos hardware and software is also necessary. For the next 12 months, they will strive to make

incremental improvements to their garments, namely making them machine washable instead of

hand wash only, while increasing the functionality of the suit. In terms of their software and its

deployment, social media sites and outside bloggers have revealed the importance that Athos’

customers place on the user friendliness of the product and fixing minor tech issues with the app.

To reach the masses for adoption, their ecosystem should be open to allow integration and

exportation of information to third party sources, making Athos products truly IoT compatible.

Other improvements that must be prioritized include increasing comfort, fit, style, and reliability

or durability of the product in order to keep up with the competition. To increase adoption, Athos

should deepen their existing partnerships with professional athletes to create a more engaging

experience with the product.

Exhibits

Exhibit 1: Bass Diffusion Model

Exhibit 2a: Category Life Cycle

Exhibit 2b: Modified Category Life Cycle

Exhibit 3: Strategy Diamond

Exhibit 4: Direct/Indirect Competitors

Exhibit 5a: Buyer Utility Map for Direct Competition

Exhibit 5b: Buyer Utility Map for Indirect Competition

Exhibit 6: SWOT Analysis OMSignal

Strengths● Accurate sensor reading● Partner ecosystem● Durable and comfortable product

Weakness● Customer needs additional appliance

to read sensors (box)● App only supports iOS● Long development cycles

Opportunities● Built OM platform for runners to bring

runners together● Growing smart wearable market

Threats● Large businesses are building

platforms that encompass a variety of fitness metrics

Exhibit 7: SWOT Analysis Hexoskin

Strengths● Provides hardware and platform

solution (Mobile: iOS & Android, WebApp Dashboard, Open API)

● Compatibility with 3rd party consumer hardware & software, visualization & analysis software platform (Apple Watch, Strava, Vivosense)

● Available for purchase through distributor (Best Buy Ca) and e-commerce

Weakness● Outdated & rudimentary design of

consumer software products (iOS & Android)

● Uninspiring, cookie-cutter web design of website (Shopify)

Opportunities● Large target demographic spanning

across multiple verticals (Athletics, Medical Research, Military)

● Sustain user retention and facilitate innovation as not only as a hardware solution, but a software platform.

Threats● Sustaining innovation, many other

competitors are developing software platforms around their wearables

● Poor UI|UX may deter users during the Pre-Purchase and Use Stages (website, mobile apps)

Exhibit 8: SWOT Analysis UA HealthBox

Strengths● Product Depth● Database● Brand name● Resources

Weakness● Slow moving organization

Opportunities● Reliable partner to provide smart

wearables● Large customer segment● Data obtained can be used as tool for

hospitals, insurance companies, and corporate health programs

Threats● Competitor patents● Technology (ever-changing)

Exhibit 9: Channel Structure

Exhibit 10: Competitive Product Analysis

Metrics Competitive Product Analysis

Athos OMSignal Hexoskin UA HealthBox

Price $549 for full body suit + 1 core

$199 for shirt, box, and app $399 for shirt + 1 core $400 for entire healthBox

Product Package

Shirt, Shorts, and 1 EMG core, mobile app

One shirt, one box, and mobile app

Shirts (Men’s, Women’s, Junior’s)

Scale, Wrist Wearable, and Heart Monitor

Product Claims

Improves muscle asymmetry, balance, allows athletes to tailor workout to suit fitness goals, prevents injury

Comfortable wearable to improve fitness through tracking heart rate, cadence, distance, and caloric burn

Measures heart rate, variability, breathing rate, breathing volume, activity, and sleep

Allows you to stay healthy, and live longer.

Target Consumer

All Athletes concerned about fitness

Fitness enthusiast, and Runners

Athletes, Health Researchers, Space Researchers

All people concerned about health

Brand Positioning

Fitness and Training Fitness and Training Health and Fitness Health and Fitness

Hardware EMG-Measures muscle exertion/utilization by region,

Measures vO2, heart rate, breathing rate, breathing

ECG-measures heart rate, respiration rate, VO2 Max,

Measures heart rate, REM cycle (sleep), steps

UA Healthbox

Retailer

Consumer

Retailer

Consumer

Consumer

Consumer

OMSignal

HexoskinAthos

Features (what it measures)

heart rate, respiration rate, calories burned, motion, breathing patterns

volume and balance, activity intensity, calories

activity (steps, cadence, acceleration), calories, sleep patterns

# of sensors Shirt- 12 EMG (muscle), 2 heart rate, 2 breathingShorts- 8 EMG, 4 heart rate

Movement sensor, heart rate sensor, breathing sensor, GPS

3 ECG “cardiac” sensors, 2 breathing sensors, 1 movement sensor

UA Scale: 4, 396 lbs maxUA Heart Rate: 1 on skinUA Band: 1 on skin

Fabric Specs UPF 50, compression fit, 4-way stretch weave, flat stream construction, warp knit

Machine washable Italian fabric, UV protection, machine- washable, lightweight, anti-odor, water resistant

N/A

Mobile Platform

Yes (iOS) iOS Android, iOS Android, iOS

Desktop Web Platform

No No Yes Yes (MyFitnessPal)

SDK (Software Development Kit)

No In Development Yes (iOS/Android) Yes (iOS/Android)

Open API No In Development Yes Yes

Product Line Length

1, can be split (just shirt, or just pants)

1 1 1, 3 if scale, wristband and heart monitor are counted as separate

Battery Life 10 hours (Core) 14-16 hours or one full day 14 hours UA Band: 110 mAh (up to 5 days)UA Scale: 4 x AAUA Heart Rate: 220 mAh (up to 365 hours)

Citation (“Best Fitness Tracker”) “Under Armour HealthBox Fitness Tracking System”