Fossil to sell smartwatch IP to Google for $40 million

As Apple holds firmly onto its lead in the wearables category, Google seeks to refresh its flagging Wear OS with help from Fossil's IP and its R&D team.
Written by Stephanie Condon, Senior Writer

Fossil Group on Thursday said it plans to sell Google its smartwatch IP for $40 million. As part of the deal, expected to close this month, a portion of Fossil Group's research and development team currently supporting the transferring IP will join Google.

The fashion-focused company -- which includes brands like Michael Kors, Kate Spade New York, Diesel -- could infuse some much-needed life into Google's wearables category at a time when Apple has all but cemented its lead with the Apple Watch.

"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," Stacey Burr, VP of Product Management for Wear OS, said in a statement.

Last year, Google indicated Wear OS could be an important part of its AI-driven future, redesigning the wearables platform with a focus on Assistant notifications. However, Google's commitment to wearables may have been in question, given that the tech giant has yet to offer its own Wear OS watch. Meanwhile, as ZDNet's Ross Rubin recently noted, the limited customization options of Wear OS has made it difficult for brands to integrate the platform into their own portfolios.

All the while, Apple has stepped up the features available with the Apple Watch, culminating with the Apple Watch Series 4's FDA-cleared ECG sensor. That should help Apple hold onto its significant lead in the smartwatch market: According to ABI Research, the iPhone manufacturer's smartwatch market share came to 43.45 percent in 2018, well above its nearest competitors.

ABI Research predicts that smartwatches will see shipments increase from 40 million in 2018 to over 99 million in 2023.

Meanwhile, though part of the Fossil R&D team is moving to Google, Fossil Group is retaining more than 200 R&D team members to focus on innovation and product development, the company said. Smartwatches have become Fossil Group's fastest-growing category, with 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," Fossil Group EVP Greg McKelvey said in a statement. "We've built and 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."

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