Google debates strategic Jawbone investment

Could a strategic investment in Jawbone help Google tap into the wearables and sensor market?

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Jawbone

Google is considering investing in wearables maker Jawbone, a move which could further the firm's ambitions in the wearables and sensor industry.

The Mountain View, CA-based firm is mulling over the possibility of a "strategic investment" in Jawbone, the developer of fitness trackers including the Up fitness range, as well as Jambox speakers. Several sources close to the matter told Re/code the talks are preliminary and nothing is yet set in stone, as Jawbone is also meeting with other investors as part of a fresh funding round.

The size of the potential investment and valuation of San Francisco-based Jawbone are also not clear. However, the company's valuation has been pegged at a value of at least $3 billion.

Jawbone investors include Rizvi Traverse, Andreessen Horowitz, JP Morgan's Digital Growth Fund, and Sequoia Capital. The firm's board of directors also includes a list of heavy-hitters in the tech space, such as venture capitalist Ben Horowitz and Yahoo CEO Marissa Mayer.

The company is in the midst of completing a $250 million funding round, which began last year and has not yet closed. The Financial Times reports that Jawbone's deteriorating finances could be to blame, brought to light through a lawsuit filed against the wearables maker by Flextronics in August last year. Flextronics, an electronics manufacturer tasked with making the Up fitness band, sued Jawbone for allegedly breaching a contract and accepting over $20 million in goods which were "not paid for."

The case was eventually settled out of court.

In addition, Jawbone has been hit with a number of hardware failures over the past few years, and was forced to recall and replace a number of faulty Up bands which were unable to charge properly.

In November, Jawbone introduced the UP3 (.PDF), a multi-sensor activity and health tracker. The tracker collects biometric data including skin temperature, heart rate, sleep stages and an accelerometer. The UP3 has up to seven days of battery life and is water-resistant up to 10 meters.

However, the firm's latest activity tracker has been delayed for a number of months. Announced in November, Jawbone said the band would take a "few weeks" to ship -- and in February, customers are still waiting. The band is expected to ship in the coming weeks.

The sources also said that despite rumors to the contrary, Google currently has no intentions to purchase Jawbone. However, an investment could make sense. Despite delays and hardware issues, Jawbone has carved out a niche in the wearables arena. The firm's products often receive positive reviews, and if Google partners with Jawbone, the company could bolster its position as Apple readies the release of the Watch in April. While Google is linked to the wearables market via the Google Android Wear operating system, devices powered by the OS haven't truly captured the interest of the general public.

Jawbone, too, could benefit from the partnership by boosted brand recognition, in the same manner smart home device maker Nest enjoyed when acquired by Google last year.

Google declined to comment on the report. ZDNet has also reached out to Jawbone and will update if we hear back.

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