Google’s Wear OS may well have died a slow death by now, if not for Fossil Group. In 2016, it went all-in on the smartwatch platform, across not only the Fossil brand but also its accessory licensing deals with a whole host of designer names including Michael Kors, Emporio Armani, Skagen and Diesel.
That makes the news this week that Google is paying $40 million for new smartwatch technology, developed by Fossil Group, all the more intriguing. Not only has Fossil succeeded in making Wear OS fashionable, it’s now having an impact on future features, too.
This is good news for Google and its rather interesting recent history with hardware acquisitions. Let’s put that $40m into perspective. Google (well, Alphabet) paid $3.2 billion for smart-home company Nest in 2014, it bought Motorola for $12.5bn in 2012 then later sold it to Lenovo at a gargantuan loss for $2.9bn. It paid $1.1bn for part of HTC’s smartphone team in early 2018. You get the gist: $40m is peanuts to a company like Alphabet.
Greg McKelvey, executive vice president and chief strategy and digital officer for Fossil Group, says the smartwatch technology has been in development for "several years".
"Fossil Group and Google have been partners for years," he says. "We are deeply integrated as a team and will continue to be. This deal reflects our continued partnership with Google and our shared investment in the wearables space."
Quite apart from the size of the transaction, though, is how Google is treating it. The deal includes “a portion” of Fossil Group’s R&D team moving over to Google, with more than 200 remaining, and the mysterious technology will roll out first on Fossil Group smartwatches, across various brands, and then to the wider Wear OS cohort.
This isn’t a big acquisition that could soon turn messy internally: see Nest. It doesn’t seem to be straightforward patent protection either, as per Motorola, because who else would it make business sense for Fossil Group to partner with, if not Google? Tizen? Apple? And unlike in the case of the HTC design team, where it’s unclear how much input they had on the Pixel 3, plans have already been made to deploy the technology and talent in question. We won’t know until this mysterious technology is revealed, but it appears that Google is making a smart hardware move to bolster Wear OS: focus on the platform and the technology and allow its impressive roster of fashion and watch partners to do what they do best.
Don’t forget this is the Wear OS that was abandoned by Samsung, Asus, Huawei and Sony, either for their own proprietary smartwatch operating systems or for no substantial smartwatch strategies at all. In Sony’s case it retreated into its crazy e-paper strapped FES Watch. Alongside Fossil, brands such as TAG Heuer, Montblanc and Casio have continued to support Wear OS, but none have made much of an impact.
“Make no mistake, Fossil plays a key role,” says Ramon Llamas, research director at IDC’s Devices and Displays team. “Wear OS needed a champion, just like any other platform and device category (see Samsung and Android). Because Fossil Group has sub-brands that appeal to a wide audience, like Kate Spade and Michael Kors for women and Diesel for men, it was able to reach far beyond the tech enthusiasts and into an already-hungry market segment that was used to buying and upgrading watches. And that has been a significant contribution for Google.”
Fossil Group hasn’t released figures on its Wear OS smartwatch sales, but there are some signs that 2018 was the year its investments started to pay off. Michael Kors reported in its earnings call for the quarter up to September 29. 2018 that its Access smartwatches “outperformed” its broader watch and jewellery segment.
IDC’s Quarterly Wearable Devices Tracker estimates that a total of 4.4m Wear OS smartwatches were sold in 2018 versus 4m Tizen watches (Samsung) and 21.7m Apple Watches.
People are quite happy to have Google and Samsung in their pocket, in their car, in their home, but the numbers speak for themselves when it comes to our wrists. Apple is the only tech brand with the desirability and design appeal to make an everyday smartwatch work at mass scale, and even Apple has collaborated on accessories with Hermès and Coach.
A fitness-focused Pixel Watch is perhaps what the internet thinks it wants this week, but what Google needs for Wear OS, more than one ‘killer’ device that will disappoint as every wearable before it has done, is innovation in the form of useful features wrapped up in good-looking packages. Plural. With this deal, it appears that Google has leaned into this idea, at least when it comes to smartwatches. Stacey Burr, VP for product management for Wear OS, Google, declined to comment for this piece but a Google spokesperson told us: "This is part of our commitment to the growth of the wearables space – by making this innovation available to our entire partner ecosystem."
Read more: The best watches for less than £1,000
“Google has always had a focus on platforms and services, but it has also had a hand in hardware (see Google Assistant, Pixel, and Pixel Buds),” says Llamas. “But first, I think Google needs to have a platform in place before moving onto hardware. A lot of reaction to this was that Google would build a Pixel Watch, something that many in the market have been hoping for. I don’t see it that way. If anything, it’s a way to develop the platform.”
So, what exactly is Google getting for $40m? Neither company will say, other than that the technology has “evolved” from Fossil Group’s acquisition of activity-tracker maker Misfit. That suggests it is in the health and fitness space. In order to catch up with Apple, Fitbit and consumer health tech startups, this could be anything from on-wrist ECG, detection of atrial fibrillation and sleep apnea or non-invasive glucose monitoring. Misfit’s expertise was focused around sleep tracking, as well as steps, so that could be a real possibility.
The addition of built-in GPS and heart-rate tracking on Fossil Group’s 4th-gen Wear OS smartwatches, though, was a welcome move but not reliable enough to match dedicated sports watches. The only other tweaks it has made to Wear OS over the years have come in the form of micro-apps including outfit-matching watch faces on Kate Spade smartwatches and Instagram integrations on Michael Kors models. These have been well designed, glanceable features, thoughtfully created with each brands’ customers in mind, but remain minor additions when zooming out and looking at where smartwatch and lifestyle tech is heading.
“Fossil Group’s comments on this being a new market technology are a bit cryptic,” says Llamas, “and hints that it could be something else entirely. And that’s a good thing, too, since the smartwatch market is far from being a mature one.”
This article was originally published by WIRED UK
