On its own Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google acquiring the smartwatch intellectual property portfolio from Fossil (NASDAQ: FOSL) (along with a passel of R&D employees) for $40 million wasn't enough to convince many that a long-rumored Pixel Watch may finally be coming. It was a small transaction, and any number of rationales could be floated to explain the purchase.
Fossil itself reiterated that it retained some 200 team members, and said the deal highlighted the two companies' "shared investment in the wearables industry." Maybe it was just much ado about nothing.
Image source: Fossil.
However, it was recently discovered that Google posted a job opening looking for a vice president of hardware engineering for wearables, and considering there are virtually no Google wearables on the market -- unless you count its Pixel Buds, the Bluetooth earphones for Pixel phones -- this may be the signal that Google is actually moving into wearable hardware of its own, and a Pixel watch could be forthcoming.
Google's OS has worn thin
Fossil is one of the remaining major OEMs still building smartwatches based on Google's Wear OS software. Samsung, for example, after collaborating with Google on what was then known as Android Wear, developed Tizen as a fully capable competing OS. Motorola, which also used Android Wear, quit making smartwatches altogether.
Google has struggled to have Wear OS keep up with the likes of Apple and Samsung; some suggest it is hampered by an aging Qualcomm chip architecture that has not been updated in several years.
Yet Google did overhaul the look of the OS last year to make it function more like the Google Fit app, and Fossil says smartwatches are its fastest-growing segment.
The person for the job?
Still, the size of the Fossil acquisition looks like pocket change if it is presaging the launch of a new piece of hardware. When Google bought the IP and Pixel smartphone personnel from HTC in 2017, it paid $1.1 billion for the portfolio and got some 2,000 employees. It makes the Fossil deal look quaint in comparison.
However, industry site Android Police discovered a job listing for the new position at Google that would have the wearables VP "be responsible for the design, development, and shipment of all Google's Wearable products" (the position seems to have been filled as the listing is no longer up). As noted, there are no real Google wearables available, so this could be where Google gets serious about building out its own portfolio of wearable products, including a smartwatch.
Yet, if the critics are correct that Qualcomm's Snapdragon chips are a limiting factor, then Wear OS in a Pixel Watch may not be enough to make the device a hit. Because both Apple and Samsung build their system-on-a-chip processors in-house to power their smartwatches, and typically upgrade them every year with better and faster performance benchmarks, Google may have to follow suit if it wants to effectively compete in the smartwatch marketplace.
We've been told for a while now that a smartwatch from Google would be coming, but it's always been just over the horizon, as Google has largely been happy to coordinate in the background with manufacturers.
Now it has some key technology in its grasp, as well as people knowledgeable about making it a reality. With a leader apparently on board to direct it all, Google may finally be ready to unveil its first real wearable device.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A and C shares) and Apple. The Motley Fool owns shares of Qualcomm and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.