Here Comes the First “App Store” for Hardware

The most successful technologies are those aimed at what Steve Jobs called “things people want to do.” That is, they answer a human need that has remained constant throughout history, rather than cater a particular “market.”

I’m convinced that Mighty Cast ’s NEX band—or something like it—is one of these technologies, the sort that has the potential to grow well beyond its original purpose.

But first, what is the NEX band? According to marketing materials put out by the Montreal, Canada-based startup, it’s a wristband and “charm bracelet” into which users can snap “mods”—centimeter-size squares that perform specific functions, such as tracking your activity or blinking when your friends are nearby.

It’s clear from the design of the NEX band, and the company’s positioning of it as an add-on for video games, that it’s aimed at young people. Mighty Cast has already created mods that blink when a designated friend’s NEX band is in proximity, and the company is working on incorporating its bands into a location-based game.

“We do tons of focus grouping, and we have strong hunches about what the big applications will be,” says Adelman. One, they think, will send secret messages from one user to another. Another likely app will make social networks more physical, allowing mods to be swapped, traveling through networks of friends.

If all of these applications sound a bit childish, it’s important to remember that young people are exactly who the NEX band is aimed at. Young people fluidly adopt new apps and services—and rapidly spread them to one another—in a way that older users don’t. The hope is that these technologies then trickle up. And in the age of multi-billion-dollar valuations for technologies that few older than 25 have heard of, much less used (think Snapchat, WhatsApp, etc.) that’s a distinct possibility.

Much of the potential of the NEX band is in its structure: By making the band modular—so that it’s possible to snap in up to five tiny pieces of hardware that give the band new capabilities, Mighty Cast has created a platform rather than a gadget. That is, the company set out to create a device that will have a software marketplace where outside developers can come up with new applications for it. (Smartphones like Android and iPhone are both platforms in the sense that they have app stores, and arguably most of the value of these platforms is in the pool of developers and apps that they’ve managed to attract.)

The world’s first hardware-based app store?

Other wearable-computing companies are also trying to build themselves up as platforms. Samsung’s Galaxy Gear smartwatch has its own app store, and so does the Pebble smartwatch. But what makes the NEX band so different is the physical aspect: new capabilities are added or taken away depending on which “mods” are snapped into the band.

Once somone owns a NEX band, all it takes is a new mod—which will start at a retail price of $10—to give it the capabilities of some competitors’ wearables. So in theory, as Adam Adelman, CEO of Mighty Cast explained to me, “Instead of spending $150 on a Nike Fuel band, you can buy accelerometer mod, and poof, you have a fitness band.”

Mighty Cast has patented its “token and base” system, in which the band is the base and the mods are “tokens.” It has produced working prototypes and has promised it will announce three “very large” brands as partners by this summer.

Once these partnerships are announced, Adelman and his team will concentrate on rolling out something like Apple’s app store for mods and the software that goes with them. Developers who are comfortable making their own hardware can, like the initial partners in the launch of the NEX band, buy a license to interface with Mighty Cast’s hardware and software.

For developers who just want to concentrate on the software side, Mighty Cast is toying with the idea of manufacturing mods for them, says Adelman. Developers could upload an image of what they want their mod to look like, choose from a selection of internal hardware, like an accelerometer for tracking movement and a colored LED for conveying information to the user, and Mighty Cast would take care of the rest. (For example, Facebook could create a custom mod for the NEX band that is powered by a location sensor and blinks when your Facebook friends are near.)

How it works—and how Mighty Cast and developers will make money

Making the new functionalities cheap and simple to use is key to the concept of the NEX band, says Adelman. All of the expensive hardware for the system is in the polyurethane wristband itself: a powerful battery, a general-purpose microprocessor (made by ARM, the same company that dominates processors in smartphones), flash storage for software and data, and a Bluetooth LE radio for communicating with a smartphone. (Like many wearables, the NEX band is dependent on a smartphone for connectivity to the internet.)

Because almost all of the “brains” of the NEX band in the band, the mods that snap into the band can be extremely cheap and simple. The mod that would turn the NEX band into a fitness tracker, for example, would essentially just be an accelerometer designed to feed data into software on one’s smartphone. It could cost less than a dollar to manufacture, yet would retail for $10 and up, says Adelman.

“Our business is the classic razors-and-razor-blade model,” says Adelman. “We don’t need to make money on the bands, because all the margins are on the mods. And our margins on mods are almost as good as the margins on virtual goods.”

In other words, Adelman and his team have figured out a way to sell bits of hardware that are so cheap that they add little to the cost of selling the software behind them—a feature of software-only app stores, where there selling an additional unit of a good adds essentially nothing to the cost of developing the software in the first place. If it seems unlikely that such complicated sensors could be produced so cheaply, it helps to understand that all the important sensors in a smartphone are now created entirely with silicon,  making them cheap to mass-produce and subjecting them to the same Moore’s law trend of falling prices as all other silicon chips.

The killer app for modular wearables has yet to be discovered—and that’s OK

Despite my excitement about this idea, I should say that there are many more reasons why Mighty Cast might fail than succeed. Hardware startups are notoriously difficult, given the contingencies of working with physical objects instead of mere code. And given that the band has yet to launch, it’s more than a little ambitious to imagine that the product might spawn a clearinghouse for developers making a new kind of hardware tchotchke. But it’s notable that the company is even thinking about bringing modularity back to hardware—an area in which “design anorexia” has led to smaller and smaller products that are less repairable or modifiable than ever .

Others are thinking about giving formerly virtual goods some kind of physical presence; for example, the Paris-based company Qleek , which has a system designed specifically for media. But I’m unaware of any other company in this sector specifically pursuing the app-store model by allowing developers to create physical objects to plug into a platform. That’s either because the idea doesn’t translate to the world of hardware—software-based app stores allow instantaneous wireless transactions anywhere, cutting out the need for shipping or retail—or because there has yet to be a pioneer to blaze the trail.

That’s what the NEX Band hopes to become. “What we’re really trying to do is build a platform—we’re almost agnostic to whatever application does take off,” says Adelman. And this is probably the right attitude when building something from nothing. After all, when the iPhone was first released, it didn’t even have an app store. Now, apps are a $10 billion a year business for Apple, and indivisible in many smartphone-users minds from the technology Apple built—the platform that gave rise to that burst of creativity.

Whether or not the NEX band takes off—a necessary prerequisite for the platform to attract outside developers—depends in part on whether Mighty Cast’s focus group testing has truly identified the ways in which the NEX band might become a “thing that people want to do.” But it’s not a stretch to imagine that the social mods proposed for the NEX band might draw in young people—and, eventually, adults.

Reprinted with permission from Quartz . The original story can be found here .