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April 30, 2015

Q&A: Telefonica putting customers at heart of its wearables

CBR sat with Telefónica’s head of devices for the UK, Magnus McDonald-Rudén to talk market acceptance of wearable technology.

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"Let’s take a step back and explain why we are looking at wearables at all."

This was how Magnus McDonald-Rudén, head of devices at Telefonica UK, started his conversation with CBR.

Customers are at the very heart of the company when making a decision on which areas to invest, as Mr McDonald explained it "always starts from a customer perspective".

He said Telefonica does not get involved in a new category "just because we think it’s interesting, we get involved based on the insight we receive from our customers".

Towards the mid of last year, the enterprise noticed a slowdown in the handset market but a new trend was emerging: consumers became very much involved with new technologies like wearables and tablets.

Mr McDonald said: "That was really the reason for us to look more seriously into the whole wearables thing. Telefonica started to see a growing interest from a consumer base until it reached a point where we felt we want to remain relevant to them. And we needed to play a part in it."

The head of devices compared the work Telefonica is developing within the wearable industry to a journey, and said the Spanish telecom is "at the beginning of that journey".

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He added: "It is a journey both for our customers and for us. Wearables are very much an emerging category that is moving very fast across a number of different categories within wearables themselves.

"What Telefonica wanted to do was to make a big start on that journey; take a first step with our customers and consumers in the UK and so we put together what we thought was a relevant range towards the end of last year for our consumers."

Mr McDonald revealed Telefonica had entered the race with three very clear objectives.

Firstly, the enterprise looked for a solution to simplify the whole wearable system. He explained that there was confusion about what customers could do with wearables and most importantly "how would wearables work connecting to their phone and how can customers connect that kind of technology?".

Secondly, Telefonica looked into affordability and how that would impact the interest in smartwatches and fitness bands amongst consumers.

Lastly, the telecom tried to understand how to use the technology and make it relevant.

He added: "When we put together our first step in that journey we tried to approach it from those three questions."

UK market still slow in wearables adoption

The head of devices said wearables in the UK still remain as an emerging category, a very small group when compared to tablets and handsets even though "they are an exciting development area".

Before rolling out a wearable range in the UK, Telefonica looked at the venture from different perspectives.

Mr McDonald said: "We started by looking at this from the user story. What were the customer needs for that particular device and then we approached it from an affordability perspective – do we have something for our different customers’ pockets?"

The company acknowledged some customers are happy to go for something "a bit more fancy which is the latest smartwatch" but that other consumers want something more affordable and therefore the telecom has been trying to meet all those needs.

He added: "What we tried to do was to focus on three or four devices when we launched.

"The wear technology we introduced had a very good response from our customers. And then they wanted something with more features from an Android wear perspective, able to have music to go with them on the move or GPS built in on board able to support notifications."

Telefonica answered consumers’ demands with Pebble, a smartwatch running on its own OS, using customised FreeRTOS kernel.

Mr McDonald said: "The reason why we put a Pebble out there was we wanted to make sure we had a device that meets the needs of an iOS customer with a long battery life solution that works with an iPhone."

Second wrist wearable technology

The enterprise has also started to look at smartbands, which are a "more affordable option with some interesting features".

Telefonica calls it "second wrist wearable technology" and justifies the move with different reasons why customers need this type of device.

He added: "The key trends that are beginning to show are that consumers want simplicity.

"One key case within the concept is how to make it easier to manage notifications and information.

"The other one is the fitness wellbeing, where consumers are seeing the additional benefit of wearing a fitness band."

The head of devices said fitness bands are now very common in the UK and combining that with other features such as notifications and music, will allow Telefonica to create a much more rounded device, "justifying sometimes the higher price".

Other Telefonica solutions currently available in the British market include O2’s Tu Go service.

The service works with conversation timelines and was designed to make it easy to continue conversations across devices. Tu Go for Web also makes it possible to conduct up to five conversations at once.

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