Google and the Fossil Group announced earlier today that the tech giant is acquiring some of Fossil’s smartwatch intellectual property, suggesting Google may be making its own competitor to the Apple Watch, or, as wishful pundits refer to it, a Pixel watch. It’s not an outlandish idea: As first reported in Wareable, Fossil Group executive vice president and chief digital officer Greg McKelvey says the $40 million deal will result in the launch of “a new product innovation that’s not yet hit the market.” Google buying up talent as it ramps up hardware efforts is also not unprecedented: In early 2018, it spent $1.1 billion to buy a significant chunk of the HTC smartphone team that had helped develop Google’s Pixel phones.

But Google’s $40 million buy of some of Fossil’s smartwatch tech also says a lot about the broader smartwatch market. In short: Fitness has been driving this whole category of technology, more so than fashion. And it underscores the challenges that fashion brands like Fossil face as they try to incorporate more technology into their products, spending millions to build in-house tech teams that will make their already-wearable stuff more useful.

Buying Time
Back in 2015 Fossil Group made a big bet on smartwatches (or at least fashion watches with some sensors in them) when it acquired wearable-tech startup Misfit for a reported $260 million. Fossil Group’s McKelvey told WIRED that within a year, smartwatches grew into a $160 million business for the company, which makes watches for brands like Michael Kors, Burberry, and Adidas. Within three years, smartwatches had become a $400 million dollar business, a not insignificant chunk of revenue for the $2.5 billion fashion brand.

A $40 million sale to Google seems paltry in comparison to Fossil’s investment in tech over the past few years. But Fossil Group has emphasized that this is less of a traditional acquisition and more of a partnership (everyone in tech loves a partnership). Fossil Group will retain around 200 engineers to keep supporting the company’s fashionable smartwatches. The core assets Fossil acquired from Misfit will stay, too. The deal with Google is “focused on a product that we developed on top of their platform, that today is not in the market,” McKelvey said.

Many signs point to this deal resulting in some type of fitness-focused wearable. For one, Fossil’s most recent smartwatch release was a certified sport watch, not a delicate wristwatch that counts steps. The $255 Fossil Sport has built-in GPS, a heart-rate sensor, and decent battery life. It’s powered by Qualcomm’s Snapdragon 3100 wearable chip, which was tweaked from the previous version to give hardware makers more control over health and fitness data. Naturally, it runs on Google’s Wear OS operating system.


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