Intel Corporation (INTC) recently invested nearly $24.8 million in Vuzix Corporation (VUZI), a global distributor of video eyewear and smartglasses, to expand its presence in the wearables market.
Based in New York, Vuzix develops computerized, Internet-connected glasses and other video eyewear aimed at consumer, businesses and entertainment markets. Its products include personal display and wearable computing devices, focused on next generation optics and displays that can be used in wearable glasses that double up as a fashion accessory. The company has its offices in New York, U.K. and Japan.
Reportedly, Intel bought 49,626 shares of Vuzix's Series A preferred stock that are convertible into 4962,600 common shares equivalent to 30% of Vuzix’s total outstanding stock. As holders of Series A preferred stock, Intel has the right to vote and can appoint two members to Vuzix' board of directors, in addition to its current five members.
Intel's fund will be used for general working capital, helping Vuzix to speed up the ramp up of next generation fashion-based wearable display products. The investment will help Intel to capitalize on the phenomenal growth expected in the niche wearables market.
The wearables market offers products ranging from smartglasses to fitness bands and watches that appeal to consumers both as gadgets and fashion accessories. Though currently at a nascent stage, this market is expected to have radical implications on a number of sectors, like fitness, healthcare, medical, industrial and military. A growing number of technology giants, like Google (GOOGL) and Apple (AAPL), are betting on this market’s potential and developing wearable technology products.
Intel, though a late entrant in the smartphone and tablet market, is firing on all cylinders to expand into the growing wearable technology arena such as smart watches and other Internet-enabled wearables. This investment in Vuzix Corporation is yet another effort by the chipmaker in this regard.
Additionally, in Dec 2014, Intel teamed up with Luxottica Group SpA to develop high technology smartglasses for the wearables market. In September, Intel collaborated with Fossil Group, the global maker and distributor of consumer fashion accessories, to develop next-generation fashionable products for this market. Reportedly, the new version of Google Glass, to be launched in 2015, will also be powered with Intel’s chips, replacing the ones from Texas Instruments. Additionally, the chip giant has already collaborated with The Michael J. Fox Foundation for Parkinson’s Research to develop a wearable device to better monitor and treat Parkinson’s disease. It also acquired Basis Science, a health-tracking smartwatch manufacturer, in the beginning of last year.
According to IDC, nearly 112 million units of wearable gadgets are expected to be shipped by 2018. Another report from Transparency Market Research states that the market is expected to be worth $5.8 billion by 2018.
We believe that with the recent investments and collaborations, Intel stands to gain from the significant growth potential of the wearables market.
Intel currently has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment