Google and Fossil Group were involved in some kind of acquisition deal yesterday. Despite being a fashion brand, Fossil is probably the biggest remaining seller of
Android Wear OS hardware. Brands like Fossil, Michael Kors, Diesel, Emporio Armani, and Misfit are all part of Fossil Group, and all produce Wear OS devices. Fossil sold Google some IP and “a portion of Fossil Group’s research and development team currently supporting the transferring IP” for $40 million.
Fossil’s stock jumped 8 percent on the news, which was probably “mission accomplished” as far as this announcement was concerned. The press release sent the tech community into a tizzy, though.
“Google cares about Android Wear?” “This will fix everything!” “When is the Pixel Watch coming out?”
It’s all being blown way out of proportion. The Fossil deal is not going to fix Wear OS. This is not the acquisition that will lead to a Pixel Watch. In reality, the deal was probably too small to really matter. Let’s pour some cold water on all this optimism. Wear OS is still doomed.
The deal was incredibly small
I’ve seen the Google/Fossil deal compared to the Google/HTC deal that closed in 2018, and there are some similarities. Google and HTC worked together to build the Pixel 1, Pixel 1 XL, and Pixel 2 smartphones. Eventually, the two companies struck a deal that would let Google bring this collaboration in-house, acquiring IP and employees from HTC. With the HTC deal, Google became more of an end-to-end smartphone manufacturer.
Today, Google and Fossil collaborate on smartwatches. Fossil and many other traditional watch manufacturers are able to make Wear OS because Google offers a turnkey hardware and software solution to these non-tech companies. These fashion brands are in charge of the aesthetic design and can pick from a few features, but on the inside, they are basically all the same. Just like HTC, Google is getting some IP and employees.
Those vague, general outlines are about where the similarities end, though. The primary difference between the two deals is just the scale of the two acquisitions: the Google/HTC deal was 1.1 billion dollars. It needed to be approved by regulators around the world. Google wrote multiple blog posts about it. It was a large and transformative acquisition—one of the top 5 biggest Google acquisitions of all time.
The Google/Fossil deal was for —OK, 0.04 billion dollars ($40 million) if you want to include two decimal places. It was incredibly small. No regulator will bat an eye at it. There won’t be a blog post. In the big list of Google acquisitions, the $40 million Fossil deal wouldn’t make it into the top 30, and that’s before adjusting for inflation.
Just in terms of the dollar amount, it’s hard to compare the two acquisitions with a straight face. If it was a significant transaction, it would have cost Google a significant (relatively speaking) amount of money.
Google and Fossil already shot down your Pixel Watch theory
Google’s hardware division started up sometime in 2016 and has produced a line of interesting and sometimes even best-in-class products. To date, Google’s hardware division has made three phones, two tablets, three laptops, three smart speakers, a smart display, two Wi-Fi routers, two phone-powered VR headsets, and a bunch of Chromecasts and accessories. I often argue that the phones could be better, but Google Hardware’s vertical integration of hardware and software often allows it to tackle new form factors, try new things, and bring a level of polish and support that usually doesn’t exist in a third-party product.
Google Hardware has never attempted a first-party smartwatch, though. With basically every other major Google platform getting a flagship Google Hardware device, it’s hard to interpret the lack of a Wear OS device as anything other than a condemnation of the platform. Wear OS is bad, Google Hardware has , and it’s not going to build a smartwatch unless it can make a good smartwatch. At least, I hope that is Google’s reasoning.
The dreams of a Pixel Watch have led many to connect this minor Fossil technology acquisition to a first-party Google watch (Feel free to CTRL+F for “Pixel watch” in any of these reports: 1, 2, 3, 4), but Google and Fossil already shot down these theories. The two companies took part in an interview with Wearable, where Greg McKelvey, EVP and chief strategy and digital officer of the Fossil Group, admitted that this technology was for third-party devices and would be opened up to the whole Wear OS ecosystem. “The Fossil Group will bring the product to market across our full breadth of brands over time” McKelvey told Wearable. “And then, in true Google fashion, the technology will be expanded across the industry over time to benefit all.”
Something that will debut on a Fossil product first and then be opened up to the rest of the ecosystem doesn’t sound like a killer enabling technology for a first-party watch.
McKelvey went on to say that the technology is a “new product innovation that’s not yet hit the market” and stems from the company’s acquisition of Misfit, a fitness tracking company. The Misfit DNA makes this technology sound more like an acquisition to enable a new Google Fit feature.
If Google really wanted a piece of technology to make a first-party smartwatch stand out from the crowd, it already has something in-house that would earn itself a lot of attention: Project Soli. Soli is a tiny radar chip that would let users control a device via air gestures. It recently got FCC approval and is commonly demoed as a new smartwatch interface. I don’t think Project Soli could save Wear OS, because before you slap on an interesting gesture system, you would need to fix Wear OS’ crippling CPU problem.
Fossil can’t solve Wear OS’ biggest problem
Fossil is a fashion brand. It’s not a tech company with any kind of expertise that can fix Wear OS’ numerous foundational problems.
If Google really wants to fix Wear OS, the first thing it needs is to secure a good SoC supplier. Today, no component vendor sells a good smartwatch SoC that a company like Google can buy. Qualcomm is really the only game in town, and it doesn’t seem to care about the smartwatch market. Qualcomm has had three major “generations” of smartwatch chips: the Snapdragon 400, the Snapdragon Wear 2100, and the Snapdragon Wear 3100. Fundamentally, these three chips, released over a four-year span, are all the same. They all use Cortex A7 CPUs built on a 28nm manufacturing process, which was state-of-the-art smartphone technology back in 2013. Qualcomm hasn’t invested in building a serious smartwatch chip and instead only pays lip service to the market by repackaging the same core technology year after year. I don’t think it’s possible to build a viable, competitive smartwatch using a Qualcomm chip.
Meanwhile, the non-Wear OS competition is Samsung and Apple, both of which have their own private SoC divisions where they can invest in building quality smartwatch chips. I would argue Apple’s “S” line of SoCs is the primary enabling technology of the Apple Watch—it can be compact, fast, and long-lasting thanks to a smartwatch SoC with actual effort behind it. Apple doesn’t talk much about technical details, but the S3 chip in the Apple Watch Series 3 was claimed to be 70 -percent faster than the S2 SoC. The S4 SoC in this year’s Apple Watch Series 4 is claimed to be two times faster than the S3, and it’s a modern ARM design with 64-bit compatibility.
Wear OS has seen the kind of performance increase that the Apple Watch enjoys every single year. If you read Qualcomm’s press releases carefully (2100 launch, 3100 launch), you’ll notice the company never even claims its new smartwatch chip is faster than its old smartwatch chip. We’ve verified this with benchmarks, too. It’s just the same ancient CPU being repackaged over and over.
When it comes to hardware, Google relies on an ecosystem of component vendors to produce a good product. This works fine in established markets like smartphones, but it makes it very hard for a company to break into new form factors that the component vendors aren’t already heavily invested in. Non-Apple smartwatches are not a thriving market, and component vendors would have to take a big risk to develop quality components for a market that doesn’t exist yet. Qualcomm has clearly decided it’s not willing to take that risk.
Wear OS is what happens when a hardware ecosystem collapses. You can build the best hardware and software on Earth, but if it’s all running on a hundred-year-old SoC that is hot, slow, big, and has terrible battery life, you aren’t going to end up with a good product. Unless Google can shore up the foundation of its platform and secure a new line of quality, competitive smartwatch SoCs, there is nothing that can be done to save Wear OS.