Google in $40m deal with Fossil to acquire smartwatch technology

Technology and staff to shift to Google following deal

Google is planning a new assault on the wearables market following a $40 million tie-up with Fossil Group, the fashion company behind the Fossil watch and smartwatch brand.

The company is buying-up the smartwatch intellectual property in a deal that will also see staff transfer to Google.

The news was revealed by specialist website Wareable in an interview with Fossil Group chief strategy and digital officer Greg McKelvey.

The deal, McKelvey told Wareable, will result in the launch of a "new production innovation that's not yet hit the market". He added, somewhat cryptically: "It's new to the market technology and we think it's a product that has features and benefits that aren't in the category today."

Google's vice president of product management of Wear OS, Stacey Burr, added that the acquisition would enable the technology being developed by Fossil to be made available to "partners in the [Wear OS] ecosystem". She continued: "It's about bringing great features to the widest numbers of on-the-go consumers."

The deal is expected to be finalised before the end of the month, with the technology being incorporated into forthcoming new Fossil products before being rolled out by other Wear OS product makers later.

Fossil was started up in the mid-1980s to import watches from the Far East to the US and developed into a broader fashion brand, including its own range of smartwatches running Google's WearOS. In November 2015 it acquired wearables company Misfit, co-founded by former Apple CEO John Sculley, for a reported $260 million.

Today, the company has design studios in Switzerland and manufacturing facilities in China. However, the company has seen revenues decline in recent years, with sales falling from $3.51 billion in fiscal 2014 to $2.79 billion in fiscal 2017, when it also posted a net loss of $478 million.