Google has agreed to pay $40 million to acquire a still-under-development smartwatch technology from Fossil Group. While the companies have not disclosed much about the technology in question, there is reason to believe it is health or wellness-related. 

Greg McKelvey, EVP and chief strategy and digital officer of the Fossil Group, told Wareable that the technology is something that grew out of the company's $260 million acquisition of Misfit Wearables back in 2015. Misfit, an early high-profile player in the health wearables market, is known for its minimalist, fashion-forward trackers the Misfit Shine and Misfit Ray, but under Fossil has moved into more traditional-looking smartwatches like the Misfit Vapor.

The acquisition will also involve members of the Fossil's R&D team moving over to Google.

“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,” Stacey Burr, VP of product management at Wear OS by Google, said in a statement.

What's the impact

Without knowing more about the technology in question, it's hard to say what the impact of the deal will be, but the amount of money involved shows Google is serious about making a mark on the smartwatch market currently dominated by Apple and, to a lesser extent, Fitbit. 

Some are speculating that this is a step toward Google building its own smartwatch (up until now, the company has built an operating system, Wear OS, for smartwatches from other manufacturers). But it's also possible that the acquisition is software-related and will go directly to enhancing WearOS's capabilities.

Knowing that the innovation in question is health-related, it's tempting to speculate that that Google is trying to catch up with or even leapfrog Apple's recently-announced FDA-cleared ECG sensor. However, this wouldn't be consistent with the direction in which Misfit has traditionally innovated, particularly since it joined Fossil. The company's focus has always been on the unregulated wellness and fitness side of things.

What's the trend

Apple already leads the smartwatch market with 41 percent marketshare, according to research from Counterpoint released in August. That same report puts Fitbit at 21 percent, but with Fitbit's marketshare growing while Apple's shrinks. Fossil comes in a distant third with 4 percent, but it's still the logical place for Google to get a foothold.

Wear OS Director of Project Management Dennis Troper said last year that the division is very interested in the health and fitness space and plans to step up its offerings around "proactively coaching and motivating users to stay more active."

On the record

“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,” Greg McKelvey, EVP and chief strategy and digital officer at Fossil Group said in a statement. “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."