You might liken the deal to selling ice to Eskimos: a deal that sees fashion watch specialist Fossil Group selling intellectual property relating to smartwatch technology to digital behemoth Google.
The sale appears to be technical in nature. Neither Fossil nor Google have specified precisely what intellectual property is involved, but it appears to be a way of formalising ownership of technology that has been co-developed by a cross company team of engineers.
“Fossil Group has experienced significant success in its wearables business by focusing on product design and development informed by our strong understanding of consumers’ needs and style preferences,” says Greg McKelvey, executive vice president and chief strategy and digital officer, Fossil Group.
“We’ve built and advanced a technology that has the potential to improve upon our existing platform of smartwatches. Together with Google, our innovation partner, we’ll continue to unlock growth in wearables,” he adds.
As part of the transaction, a portion of Fossil Group’s research and development (R&D) team currently supporting the transferring IP will join Google. Fossil Group retains more than 200 R&D team members to focus on innovation and product development, the company says.
The transaction showcases Fossil Group and Google’s shared investment in the wearables industry. In recent years, smartwatches have become Fossil Group’s fastest growing category. 14 of its owned and licensed watch brands now have smartwatches or hybrid watch families.
“Wearables, built for wellness, simplicity, personalization and helpfulness, have the opportunity to improve lives by bringing users the information and insights they need quickly, at a glance. The addition of Fossil Group’s technology and team to Google demonstrates our commitment to the wearables industry by enabling a diverse portfolio of smartwatches and supporting the ever-evolving needs of the vitality-seeking, on-the-go consumer,” says Stacey Burr, vice president of product management, Wear OS by Google.
Shares in Fossil Group rose by over 3% on the day of the announcement, although at around $17 remain well below the price of over $100 per share last seen four years ago.