Google buys $40 million in new smartwatch tech from Fossil, acquires part of R&D team

Google buys $40 million in new smartwatch tech from Fossil, acquires part of R&D team

A huge move for the future of Wear OS.

Fossil Sport smartwatch

Fossil Group, one of the most successful Wear OS smartwatch makers, has agreed to sell $40 million in smartwatch technology to Google. The deal includes intellectual property Fossil has developed, but will also include sending “a portion” of Fossil Group’s research and development team over to Google. Fossil says it will retain more than 200 R&D team members after the transaction, and it isn’t clear exactly how many are headed to Google.

Such a large move to acquire IP and R&D talent is, at a minimum, a strong signal from Google that it intends to keep developing Wear OS and other wearable technologies. It also comes in a time where Wear OS isn’t necessarily a shining example of a great wearable platform. The transaction, which is expected to close in February, will obviously help Google further improve Wear OS and expand its capabilities both on a software and hardware level. It isn’t yet clear how Google will choose to use the IP, keeping it in-house or licensing it out to partners, but given the quotes from the announcement my assumption is the latter:

“The addition of Fossil Group’s technology and team to Google demonstrates our commitment to the wearables industry by enabling a diverse portfolio of smartwatches and supporting the ever-evolving needs of the vitality-seeking, on-the-go consumer.”

Fossil Group offers smartwatches across several different brands, both owned and licensed, and has been responsible for a large amount of the growth of Wear OS (previously Android Wear) from the technology scene out into the fashion world. With this purchase, Google can take a leap forward in wearable development, and hopefully expand its offering to other brands and markets. My expectation is that Fossil Group will still continue to develop smartwatches at the same pace, and that may even include a licensing back of all the technology it just sold.

Fossil Group Enters Agreement To Sell Select Smartwatch Technology To Google

Transaction Unlocks Growth Opportunities for Fossil Group’s Wearables Business

RICHARDSON, Texas – January 17, 2019 – Today, Fossil Group (NASDAQ: FOSL) announced its plan to sell to Google for $40 million intellectual property (IP) related to a smartwatch technology currently under development by Fossil Group. As part of the transaction, a portion of Fossil Group’s research and development (R&D) team currently supporting the transferring IP will join Google. Fossil Group retains more than 200 R&D team members to focus on innovation and product development.

The transaction showcases Fossil Group and Google’s shared investment in the wearables industry. In recent years, smartwatches have become Fossil Group’s fastest-growing category. The company successfully developed and launched smartwatches across 14 of its owned and licensed brands.

“Fossil Group has experienced significant success in its wearables business by focusing on product design and development informed by our strong understanding of consumers’ needs and style preferences,” said Greg McKelvey, Executive Vice President and Chief Strategy and Digital Officer, Fossil Group. “We’ve built an advanced a technology that has the potential to improve upon our existing platform of smartwatches. Together with Google, our innovation partner, we’ll continue to unlock growth in wearables.”

“Wearables, built for wellness, simplicity, personalization, and helpfulness, have the opportunity to improve lives by bringing users the information and insights they need quickly, at a glance. The addition of Fossil Group’s technology and team to Google demonstrates our commitment to the wearables industry by enabling a diverse portfolio of smartwatches and supporting the ever-evolving needs of the vitality-seeking, on-the-go consumer,” said Stacey Burr, Vice President of Product Management, Wear OS by Google.

The transaction is expected to close this month.

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