A crowdfunding initiative for the FES Watch recently garnered quite a bit of attention. Described by The Verge as
a thing of minimalist beauty
it is certainly an attractive looking and potentially fashionable accessory given the lovely aesthetics and elegance that it bestows upon the common wristwatch using slick design and novel materials.
More interesting and ultimately what makes it unique is the decision made to apply e-ink technology to an area outside of displays and book readers but instead this time to clothing. While not revolutionary the results look promising and are truely innovative.
Intriguing as well is the fact that market research is being done by crowdfunding. The product was unveiled to the world on a funding site Makuake but the intention had nothing to do with raising capital as even though it was backed by a then unknown company this organization was really a stealth offshoot of Sony, a company that certainly has the cash, infrastructure and human resources to launch such a product on its own.
Therefore, the objective here was to build a brand from scratch, develop hype, get pre-orders and gather ideas about product enhancements, possible improvements and general customer information. It was Market Research on the cheap and at its best. What we have here is Sony testing the waters and validating if it really has a successful fashion item that will be worthy of the effort of scaling up and mass producing.
Creators may choose to raise capital through crowdfunding rather than a traditional channel due to two primary incentives: 1) a lower cost of capital, and 2) access to more information. Agrawal, Catalini, and Goldfarb (2013).[^1]
Incentive 2 above is the key.
Photo by Fashion Entertainments.
Most commentors so far have been calling this a failure since it has only raised approximately 30k USD which is far short of what it would take to bring such a product to market especially when juxtaposed to other smartwatch crowdfunded projects such as Pebble.
However, I disagree and I am more inclined to agree with the success sticker attached to the project on the crowdfunding site. You see, this is not another smart gadget. This is jewellery! What we have here is not a wearable that has questionable usability designed to flood you with information available from that other most common and far more useful wearable device, the smartphone. Here is an accessory, it could just as easily be a bracelet that displays your name or a bowtie that alternates between many colours to match your outfit.
It is a classic dumb device that has no more utility than a mechanical watch. It tells time and that is it. There is no problem with battery life. This fits into the here and now. Unlike those other brainy wannabe devices it doesn't need to wait for the next revolution in energy storage technology to overcome any functional handicaps. The real purpose of it is to be an object of affection and unadulterated adoration. Sounds like an everyday watch to me. Sony has taken the risk of exposing its idea and getting it copied because it allows it to enter the fashion business with reduced risk. If it doesn't take off minimal effort and capital has been expended but if it does it has a ready made market and the production and team can be ramped up with a fair degree of confidence that the investment will pay dividends.
For example, in the hybrid context where funders are also able to obtain early access to the product, crowdfunding serves as a particularly informative type of marketing research, which is often modeled as reducing the variance of post-launch demand. Lauga and Ofek (2009). [^2]
Afterall, isn't the purpose of research the validation of theories and the minimization of risk through the reduction of the unknown variables and effects via observation and controlled testing?
This will be a trend. Expect other big names to follow suit.
The funding of the crowd belongs to the big boys too. Startups beware they are on your turf now. You are competing with them for your early stage venture dollars as well as mindshare!
[^1] Agrawal, A. K., Catalini, C., Goldfarb, A., (2013): "Some Simple Economics of Crowdfunding". National Bureau of Economic Research.
[^2] Lauga, D., and E. Ofek (2009): "Market Research and Innovation Strategy in Duopoly," Marketing Science, 28(2), 373-396.
Written by
Nneko Branche.