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May 17 (Bloomberg BusinessWeek) -- Andrew Carle delights in what he calls “nana-technology,” electronic gizmos designed to improve the quality of life for the elderly and their caregivers. For the past eight years, he’s been researching the senior-care industry at George Mason University in Fairfax, Va., where he serves as an executive-in-residence to students and faculty in the College of Health and Human Services. He’s also been advising companies that include Apple and Nintendo (7974:JP) about their devices.
So in 2008, when Carle came across a company developing shoes fitted with GPS devices for tracking children, he sensed the technology might be useful for a different market: seniors with Alzheimer’s disease and other conditions that make them likely to wander away from home. He cold-called its developer, GTX, in Los Angeles and suggested it get in touch with Aetrex Worldwide, a Teaneck (N.J.)-based specialty shoe-and-orthotics manufacturer he had also found online.
This December, Aetrex and GTX launched the Aetrex Navistar GPS Footwear System, a $300 walking shoe with GTX’s GPS transmitter and receiver embedded in the right heel. Caregivers go online to create a virtual fence—a zone around the person’s residence—and pay Aetrex about $39 a month to receive alerts when the wearer leaves the area. If Grandma does leave, her location will be visible as long as where she goes has cellular coverage. “If it hadn’t come up that GTX had developed a technology for shoes, I would have invented it,” says Carle, who now serves as a consultant for GTX.
According to the Alzheimer’s Association in Chicago, 60 percent of the 5.4 million Americans dealing with the debilitating disease tend to run away or wander during its last stages. The market for technology designed to assist seniors is expected to reach $20 billion by 2020, according to Laurie Orlov, founder of research firm Aging in Place Technology Watch. Dozens of cheaper watches, pendants, and bracelets with alarms and radio frequency signals are available to keep track of wanderers, but Carle says many Alzheimer’s patients or people suffering from dementia are paranoid and try to remove them. They’re less likely to toss their shoes, he notes.
“Devices can provide some peace of mind but are not a replacement for appropriate supervision,” says Beth Kallmyer, who serves as vice president of constituent services for the Alzheimer’s Association. It’s going to be different for every family,” she says. Then she reiterates: “Location devices are not a substitute for people watching the patient.”
The GPS shoe line is still new to the market, so the companies aren’t sure if it will become a significant source of revenue. Aetrex, which sells the shoes exclusively through its website, won’t disclose how many pairs it has sold. GTX Chief Executive Officer Patrick Bertagna says they’re the only ones on the market. The shoes work in 200 countries. The rechargeable batteries that power the GPS device last from 40 to 50 hours; these are water-resistant, but the electronics could sustain damage if they are soaked, according to Aetrex.
Aetrex didn’t expect to get into the GPS shoe business. Long known for designing and manufacturing shoes for problem feet, the 66-year-old business was developing a foot-scanning technology for retailers when it was first contacted by GTX in 2008. The 205-employee company, which expects 2012 sales to reach $70 million, “realized [GTX’s] technology might be a good fit,” says CEO Larry Schwartz, who liked the idea of offering a new product that “gives loved ones one less thing to worry about.”
GTX, founded by veteran software developer Bertagna in 2002, has a similar goal in licensing its technology with Aetrex. The bulk of the 30-employee company’s nearly $700,000 in 2011 revenue came from sales of tracking apps for smartphones and licensing fees for a system it designed for a global shipping company to track the whereabouts of organs destined for transplantation, DNA cultures, and other delicate scientific materials.
When it started adapting its technology a decade ago, GTX had intended to market to parents concerned about their kids’ whereabouts in the wake of the Elizabeth Smart kidnapping. “But I was overwhelmed by the statistics Andrew Carle shared with me,” says Bertagna. “I realized this was a real problem and there was a perfect opportunity to launch into a big market and do something really good for society.”