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Is the clock ticking on kids smartwatches?

With several children's models banned in Europe, but demand still spiking, kidtech companies are hoping there's still time to get in on the uncertain market.
April 26, 2019

Kids smartwatches don’t have the best reputation. The German telecommunications regulator, Federal Network Agency, banned the sale of smartwatches aimed at children and urged parents to destroy the devices, describing them as spying tools.

Then, a report by the Norwegian Consumer Council flagged several problems with the wearable tech, not least of which were security flaws, privacy concerns and risk posed by unreliable features.

To add insult to injury, the Enox Safe Kid One smartwatch was recalled in February by the European Union over data privacy concerns. The watch was equipped with GPS, microphone and speaker capabilities that could (easily, it turns out) be hacked by third parties.

Stateside, the Federal Trade Commission (FTC) sent warning letters in April 2018 to China’s Gator Group and Sweden’s Tinitell, two companies making kid-targeted smartwatches. The FTC warned them against collecting personal information and violating COPPA. Tinitell no longer makes its watch, and stopped offering support for the tech in September.

This nascent industry may not see the long-term consequences just yet, but other areas of kidtech have been down this road before. Social media, for example, is ripe with enforcement action right now, with TikTok agreeing to pay a record US$5.7-million settlement to the FTC for illegally collecting personal data from children under 13. And kids electronics maker VTech suffered a data breach in 2015 that exposed the personal information of five million customers (more than half of whom were children).

The information was obtained by hackers through the company’s Learning Lodge app, which includes content, games, eBooks, videos and more. It was closed down following the breach and then reopened that same year. VTech agreed to pay a US$650,000 fine in early 2018 to settle the problem with the FTC.

While a watch was once just a watch, perhaps adorned with a fave character, today’s time-keeping devices are so much more. Smartwatches, usually Bluetooth- or WiFi-enabled, act much like a phone. They can track and text, send voice messages and even monitor your health.

Smart_Watch

The Vivofit Jr. 2 features step trackers, challenges and integrated stories.

“The problem is not the features,” says Linnette Attai, president of PlayWell, a global compliance consulting company. “The problem is that these products seem to have been designed without the knowledge of the legal requirements. It would be in everyone’s best interests to clean up these practices now because [the category is] ripe for enforcement action.”

Attai looked at a random sampling of five of the most popular kid smartwatches and found that none had privacy policies that met the thresholds for compliance or COPPA, nor did they explain how parent consent was managed. Some didn’t have privacy policies available prior to purchase, which violates COPPA.

While she did not look at every product, what Attai found troubled her. “What I’m seeing is a sector that does not yet fully grasp its compliance obligations, its basic data privacy and security obligations, and the responsibilities that come with creating and marketing products intended for children,” says Attai.

Despite all of these issues and the minefield of problems that seems to follow any company releasing a kid-aimed smartwatch, a new wave of products have been unveiled by companies eager to capitalize on the gap in the marketplace, as parents hunt for a “safe alternative.”

For one, the market looks enticing and worth the risk. The overall smartwatch category is an estimated US$9-billion industry, and is expected to hit US$31 billion by 2025, according to Allied Market Research. In the US, 16% of adults own a smartwatch and another 22% own a fitness tracking device, says Weston Henderek, market research firm The NPD Group’s wearables industry analyst. Both, he says, are far and away the biggest products in the wearables category right now, with everything else so far behind NPD doesn’t even track it. (NPD is unable to give a full picture of how big this category truly is, though, because Apple does not publicly disclose Apple Watch sales, and that product is the biggest in the category.)

And when demand grows for adults, it often seeps into the lives of kids, creating a trickle-down effect. Indeed, fitness-tracking giant Fitbit released a cheaper, aged-down version of its Ace smartwatch in March. The Ace 2 costs US$39.95 and is aimed at ages six and up.

Hong Kong-based toyco VTech launched the first generation of the Kidizoom Smartwatch in 2014, just ahead of the first Apple Watch in 2015. Jennifer Eiselein, VP of marketing and product development at VTech, says the first year’s sales were incredibly strong because of the similarity to the adult product. Now in its third generation, the device is one of VTech’s top-selling items, says Eiselein. In terms of units and revenue, Kidizoom is one of the company’s the top-five single items and has had steady growth for the past four years.

“We were really neck and neck with the adult tech trend,” says Eiselein. “Since then, we’ve seen a sustained performance and even a little bit of growth in the last year or two as we’ve launched new features.”

VTech Kidizoom Smartwatch

VTech’s Kidzoom Smartwatch, now in its third iteration, has no WiFi or Bluetooth connectivity.

To address safety concerns, the latest iteration of the Kidizoom—released in 2017 and aimed at ages four and up—does not connect to the internet and features no WiFi, Bluetooth or GPS capabilities. Instead, the device, which comes in at US$59.99, offers a camera to take selfies and videos, along with multiple games, including augmented reality options.

As with most kidtech products, Eiselein says success in the smartwatch market is really about capturing kids’ desire to emulate their parents. Old-school roleplay toys included vacuums and lawnmowers, but for this generation of tech-
savvy Millennial parents, who are all about gender-neutral toys, those just aren’t going to cut it.

“It’s the ‘let me be like mom and dad [mentality],’ and now they’re seeing mom and dad [using smartwatches],” says Eiselein. “Kids in general are just that much more tech-savvy in this generation. Two year olds know how to work an iPhone.”

VTech has a licensing agreement in place with Disney for several Star Wars versions of its watch, including the BB-8 Smartwatch and the First Order Smartwatch. Eiselein says the primary benefit of licensing on these devices is the downloadable character screensavers, though she doesn’t think it is critical for the category.

Kansas-based fitness-tracker company Garmin, on the other hand, capitalizes mostly on licensing. After launching the Vivofit Jr. in 2016, its first ever kid-focused product, the company thought it might be onto something with an adventure map that unlocks new stories every time a child completes 60 minutes of daily fitness activity. In partnership with Disney, it has since launched Minnie Mouse, Marvel, Star Wars and Disney Princess iterations of the Vivofit Jr. 2 (US$79.99) with storylines written by the Disney team. The latest was a Spider-Man version released just ahead of the box-office smash (and now Oscar winner) Spider-Man: Into the Spider-Verse.

“We were able to leverage some of Disney’s expertise with Garmin’s expertise for helping to motivate kids with their fitness,” says Andy Beckman, director of fitness strategy at Garmin. “We really thought it was going to be a winner for all sides.”

Features include customizable alarms, step trackers and the ability to challenge both friends and family to step battles with any Garmin device. When it comes to safety, Beckman says Garmin does not collect any location information. It does, however, collect data when an account is created, including names, email addresses and passwords, as well as information from challenges, and data on parents or guardians monitoring a child’s activities on the device.

StarWars

Garmin has partnered with Disney on Minnie Mouse, Marvel and Star Wars licensed watches

While the company says it doesn’t keep or sell the info collected, Garmin declined to share details on what measures it takes to prevent hacking.

The Vivofit Jr. devices are aimed at ages four and up. While Beckman doesn’t want to limit who might enjoy the device, he says research has shown that at age 12 kids begin to own smartphones and age out of the products.

Smartphone maker Coolpad is the new kid on the smartwatch scene. In January 2019, it launched the Dyno smartwatch at CES based on its own research, which found kids under 10 (those not quite ready to own a smartphone) were being underserved.

Parents don’t have a good way to stay connected to their kids, says Coolpad chief product officer John Choi, so they’ve resorted to using everything from a hand-me-down smartphone all the way up to a pricey Apple Watch (US$500) just to keep in touch with them. But none of these solutions are specifically made for kids. Enter Coolpad’s first children’s product, a lower-cost smartwatch that it hopes will fill the gap.

The Dyno rings in at US$149 (pricier than the Kidizoom or Vivofit Jr. 2), but offers voice calls, pre-set texts (that caregivers program and control), voice messaging systems, real-time location sharing via a companion app and a step counter.

But with all of that information comes a steeper responsibility than other, more limited offerings, and according to Choi, just being compliant with COPPA wasn’t going to cut it here.

So before launch, Coolpad enlisted IOactive, a digital security company based in Seattle that has a team of ethical hackers on staff. The hackers worked three angles, first through brute force by attaching the Dyno to a computer and trying to install malware. Then it tried to hack the communication between the device and the server to make sure it was encrypted. And finally, the group tried to hack into the portal or app to obtain location information. From there, Coolpad worked to close holes in its security system. Without specifying the final cost, Choi says it was an expensive process, reflected in the product’s higher price.

Coolpad launched the Dyno Smartwatch, its first kids product, this year.

Coolpad launched the Dyno Smartwatch, its first kids product, this year.

“The biggest concern that parents we spoke with had was the potential for this device to be used for bad things or spying,” says Choi.

As kidtech companies try to find high-tech ways to keep compliance in mind when developing a modern kids toy, PlayWell’s Attai has some final cautionary words.

“If you are going to create products intended for children, there are rules and norms, and if you don’t get the fundamentals right it can be incredibly damaging down the road,” she says.

When compliance is taken to heart during the build (or even prior to a lawsuit), there is a much lower cost proposition than having to go through a state or even federal investigation and paying off the penalties and the damage that investigation would do to any company’s brand. A lot of the companies making these devices won’t have the reputation or market size to lean on to dig themselves out of that kind of financial and PR crisis.

These products can be a gamble when it comes to child safety, but the market is growing, and one of these companies could be on the ground floor of the first major offering. The big question remains, however: Will the best products make it to market before one bad apple spoils the rest of the crop?

About The Author
Alexandra Whyte is Kidscreen's Senior Online Writer/Social Media Coordinator. Contact her at awhyte@brunico.com

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