Last week, the Fossil Group announced that it was selling some intellectual property and employees to Google for roughly $40 million. This, as expected, got a lot of people excited about the possibility of Google working on a Pixel Watch. Don't get your hopes up for a Pixel Watch just yet.
Google said last summer that its focus was on partners and growing the Wear OS ecosystem. Specifically stating that "to think of a one-size-fits-all watch, I don't think we're there yet." Meaning a Pixel Watch wouldn't really fit into the Wear OS ecosystem just yet. Obviously, things could have changed from last August to now, but it appears that the general idea there is still true.
Fossil purchase was more about saving Wear OS than making a Pixel Watch
It doesn't take a genius to figure out that Wear OS is simply not doing well. In the past two years, we've seen fewer smartphone makers making smartwatches with Wear OS on-board. In fact, Huawei announced a new smartwatch last fall, and it runs its own proprietary OS, instead of Wear OS. Samsung has also gone all-in on its Tizen software for its wearables. LG is still working on Wear OS, but it is not releasing anywhere near the number of Wear OS smartwatches it did in 2014 – when Wear OS was new.
If it weren't for Fossil, Wear OS would likely have faded away by now. Fossil has launched over 100 different smartwatches across the many brands that it makes smartwatches for. This includes the likes of Emperio Armani, Misfit, Michael Kors, Kate Spade New York and others. Whereas other companies have almost stopped launching new Wear OS smartwatches.
Fossil hasn't released any new features for its own Wear OS smartwatches yet, and this is largely because Wear OS is pretty strict on what watchmakers can do with Wear OS. A stark difference from Android, where manufacturers can basically do whatever they want.
Google's purchase was mostly inside Fossil's R&D team, along with some intellectual property. In other words, software was purchased and not hardware. In the announcement, neither company mentioned what exactly Google purchased for $40 million, other than the fact that it was smartwatch technology that Fossil had been working on. Fossil did however speak with Wareable about the purchase, stating that the technology is a "new product innovation that's not yet hit the market."
This secretive technology was bought so that all Wear OS partners can use it
This purchase sounds a whole lot like what Google did with Motorola all those years ago. It bought Motorola in 2011 for around $12.5 billion. Google didn't really want to buy a smartphone maker, it wanted the patents. Motorola is one of the oldest phone makers in the world, and because of that, has a ton of patents. With the purchase, Google gained around 20,000 patents. Now that Google is in control of those patents, they can be used in Android, meaning its partners can use them in Android devices as well.
That's similar to what Google is doing with Fossil here. Getting this smartwatch technology means that it won't just be in Fossil smartwatches – though, those are really the only ones on the market right now. It means that its other partners, like LG, Huawei, Casio, TAG Heuer and others, will also be able to use the technology.
For now, everyone is left in the dark as to what Google actually bought from Fossil Group with this $40 million purchase. We may find out more at Google I/O this summer, when the Wear OS team holds its sessions at the company's annual developer conference. However, Google may never tell us what exactly it got from Fossil, and just absorb the intellectual property and employees into its Made by Google division. That is what happened with the HTC purchase a little over a year ago.
Many believe that this could be something similar to the ECG technology that Apple added to the Apple Watch last year – and what Withings introduced this year, Alphabet's Verily also got FDA clearance for its ECG monitor recently. While it could also be something totally different, ECG seems to be the big new feature for wearables these days. And if Fossil was working on that, it would make complete sense for Google to want to buy it and make it available to all Wear OS smartwatches.
Google continues to bolster its hardware division
Google has bene working to bolster its hardware division in the past few years. Before it started the "Made By Google" division, it had already owned Motorola and Nest – both of which were working independently under the Alphabet umbrella. However, in more recent history, Google has acquihired employees from HTC that were working on Pixel for Google, and now doing the same with Fossil.
For Google, $40 million is a pretty small amount, considering it paid $12.5 billion for Motorola, $3.2 billion for Nest, and $1.1 billion for some HTC engineers last year. The Fossil purchase is merely a drop in the bucket for Google, but it could make a huge difference in the one area that Google is currently struggling in – wearables.
What could Google be working on with these acquisitions of employees and technology from these companies? Well it looks like Google is serious about being a hardware company. Google has been looking for ways to diversify its revenues in the past few years, instead of getting over 95-percent of its revenue from search and ads. Hardware is likely the way that it will do just that.
Basically, the Fossil purchase was not about Google making a Pixel Watch. That is still a pipe dream that a lot of Google fans are really wanting Google to make. Instead, it was about keeping Wear OS alive, to compete with the Apple Watch. When it comes to smartwatches, the Apple Watch is the only one really selling, and Google needs to catch up. Depending on what this secretive smartwatch tech was from Fossil that it bought, it might be able to do just that.