At the Baselworld 2015 conference in Switzerland, search giant Google Inc. GOOGL announced that it has collaborated with chipmaker Intel Corporation INTC and Swiss luxury watch maker, TAG Heuer to make a luxury smartwatch, indicating a new era of partnership between Swiss watchmakers and Silicon Valley.
The smartwatch will be manufactured and assembled in Switzerland and is expected to launch in the market by the end of this this year. TAG will give details on pricing and features of the device around the fourth quarter. It will combine Swiss watchmaking expertise with high-end technology and powered by technology behemoths’ Intel’s system on a chip and Google’s Android Wear platform.
What is Android Wear?
The Android Wear platform, launched in March last year, is an edition of Google's popular Android operating system (OS) designed for smartwatches and other wearables. It helps users pair up their wearables with their smartphones, stay connected by delivering customized alerts from the smartphone and operate as a point of input for interaction with the apps. It's designed to be simple, is used through touch gestures and is dependent on voice control.
Android Wear was launched with the intent of extending Google’s mobile OS to a new category of devices offering a lower cost for developers and users at the same time.
The first devices powered by Android Wear included the LG G Watch, Samsung Gear Live and the Moto 360, LG G Watch R, or Sony SNE Smartwatch 3.
Intel’s Role
Intel will provide Tag Heuer with the internal components and sensors for its smartwatches. While previous Android Wear watches used Qualcomm QCOM or Texas Instruments processors, The Tag Heuer versions will be the first to use Intel chips.
Intel has already ventured into wearables using proprietary software platforms. In September last year, it unveiled a smart bracelet, MICA or My Intelligent Communication Accessory. Designed in collaboration with fashion house Opening Ceremony, this luxurious wearable with a curved sapphire touchscreen display is intended for fashion conscious ladies.
Growth Prospects
As per research and consulting firm Strategy Analytics’ predictions, total global smartwatch shipments are expected to grow to 28.1 million units in 2015 from 4.6 million units in 2014, marking a 511% increase. Most of this growth is likely to come from the new Apple Watch, which entered into the high-end fashion space earlier this month. The firm forecasts that 15.4 million units of Apple Watch will be shipped throughout the world in 2015. This will enable Apple to capture 55% of the total global market share this year, thereby becoming the world's number one smartwatch seller.
The smartwatch market is spicing up and so is the luxury smartwatch market. Reports of will.i.am's i.am+ partnering with Gucci Timepieces over a standalone band that can make and receive phone calls, send and receive text messages and e-mails, handle music, maps, a calendar, and fitness activities and be controlled by voice are also available.
Our Take
Tag Heuer is a 155-year old company and also one of the largest Swiss watchmakers whose collection prices start from $1,500. So, Tag Heuer, which is not only the first Swiss watchmaker but also the first luxury watchmaker to use the Android Wear platform, could easily price these luxury items above the five-figure range.
With the latest move, we expect Google to kill two birds with one stone.
First, it will give Google a platform to show off Android Wear software in a luxurious way paving the road to share gains in the segment and driving up the perceived value of its offerings.
And second, it will help Google gain traction in the wearbles market where its pet project Google Glass (a wearable technology with an optical head-mounted display) is struggling due to some security problems and privacy rights issues and still hasn't seen a broad consumer release.
Google currently holds a Zacks Rank #3 (Hold), while Intel carries a Zacks Rank #4 (Sell).
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