The Economist - USA (2022-02-12)

TheEconomistFebruary12th 2022 Business 57

Consumerhealthcare

Slumberparty

T

herichworldhasa sleepdeficit.The
average American adult snoozes al­
mosttwohourslessthantheirgreatgrand­
parentsdid.Morethana thirdofAmeri­
cansgetlessthansevenhoursofkipa
night. The resulting fatigue has been
linkedto Alzheimer’s disease,hyperten­
sionandotherailments.ItmaycostAmer­
ica’seconomyasmuchas$400bna year,
according to one study. Other wealthy
countries are similarly sleepless. Con­
sumptionofalcoholandcaffeinearepartly
toblame,asisexposuretophoneandcom­
puterscreens.Ironically,peopleareturn­
ingtosomeofthosesamedevicesforhelp.
Tinysensorsarenowmoreeasilyem­
beddedintowearablegadgetstoobserve
users overnight. Consumer­electronics
giantssuchasGoogle,SamsungandHua­
weioffersleep­relatedtechnologyintheir
gadgets.AlthoughAppleseemstobewind­
ingdownBeddit,a Finnishmakerofbed

sensorsitacquiredin 2017 foranundis­

closedamount,ithasincorporatedsleep

functionalitiesintoitsnewsmartwatches.

Specialist “sleep­tech” startups offer

fancierwares.OuraHealth,alsofromFin­

landandvaluedatnearly$1bn,sellsa $300

titaniumringthatweighsa fewgramsand

hasbuilt­inheart­rate,oxygenandactivity

monitors; Kim Kardashianis afan. Ko­

koon, a British firm, makes a wireless

headsetwhosetinyearbudsplayrelaxing

soundswhilesensorsinferthesleepstage

fromblood­oxygenlevels.EightSleep,an

Americanone,charges$2,000foritsapp­

synchedmattressthatheatsupandcools

asthesleeper’sbodytemperaturechanges

throughthenight.

Thecombinationofmoresleeplessness

andbettertechnologyhasledtoa boomin

thesleep­assistanceindustry.GlobalMar­

ketInsights,a researchfirm,reckonsthat

worldwide revenues from sales of such

gizmosreached$12.5bnin 2020 andcould

be more than triple that in five years.

MatteoFranceschetti,bossofEightSleep,

thinkstheaddressablemarketforhiscom­

panyis“literallyeveryoneintheworld”.

Afterall,everybodysleeps.

True.Butnoteverybodysleepspoorly

(orcan afford to splurge$2,000 onhis

firm’s self­styled “Lamborghini of mat­

tresses”).Andthetechnology,thoughitis

improving, remains far from perfect.

Sleeping witha watch strappedto your

wristisirritating,andthebatterymaydie

overnight.Your correspondentstruggled

toweartheKokoonheadsetoverthesatin

scarfprotectingherhair,andthe“brown

noise” designed to drown out snoring

soundedmorelikethejarringstaticofan

oldtelevisionset.

There areproblems with sleep­tech’s

businessmodels,too.Peoplecangetbored

ofwearables,andfrustratedwhenthetout­

edimprovementsfailtomaterialise.Ac­

cordingtoa surveylastyearbyRockHealth

Advisory,  a  consultancy,  almost  40%  of

sleep­wearables users abandoned their de­

vices, mostly because they did not have the

desired soporific effect. Kokoon, Oura and

Eight  Sleep  have  all  recently  introduced

membership  models  to  try  and  keep  peo­

ple  updating  their  devices.  Subscriptions

give the companies a more stable revenue

stream than one­off device sales, as well as

providing data that can then be used to im­

Assleeplessmassestuckin,investors
dreamofriches

Thereisn’tanappforthat

Earnasyougo

Throughout 2021 corporate profits in America seemed immune to infection, inflation
and snarled­up global supply chains. With most of the country’s biggest firms having
reported their latest quarterly results, revenues and earnings in the last three months
of the year seem poised to set another record. The technology industry’s annual pro­
fits rose by a quarter, compared with 2020. Among property firms in the s&p500 index
they swelled by a third. Net­profit margins have edged down from their recent peak in
the second quarter of 2021 and analysts forecast lower earnings and sales in the first
three months of 2022. It may prove to be a brief sniffle caused by unusually strong
seasonal factors. But America Inc no longer looks totally impervious.

Income support

S&P 500 index

Source:FactSet

160

140

120

100

80

60

2019 20 21 22

Q12019=100

Revenuepershare

Earningspershare

FORECAST

Net-profitmargin,%

14

12

10

8

6

2019 20 21 22 Consumerstaples

Consumer

discretionary

Energy

Industrials

Healthcare

Materials

Communications

Utilities

Financials

Technology

Realestate

403020100

Estimated net-profit margin, 202, by sector, %

S&P 500

average