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Why Intel partners with Fossil to expand in “wearables” space

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Intel announced its partnership with Fossil

In September 2014, Intel (INTC) announced its collaboration with Fossil (or FOSL). Fossil is a fashion retailer company that specializes in consumer lifestyle and fashion accessories. The companies will work together to develop innovative wearable technology for the fashion-conscious crowd. The demand for wearable devices is expected to increase many times in the near future.

Fossil makes licensed watches for Burberry, Michael Kors, Emporio Armani, Diesel, Marc Jacobs, and Tory Burch. It has a broad presence in the mid-range to high-end watch market.

wearables

Smartwatches are expected to be the highest growing segment in the wearable space

In September 2013, Samsung (SSNLF) launched its Gear smartwatch. Sony (or SNE) also launched the SmartBand Talk and SmartWatch wearable devices. Google’s (GOOG) Android Wear also came into the picture. Apple (AAPL) launched its smartwatch in September 2014.

According to Strategy Analytics, in 1Q14, Samsung dominated the global smart watch market with 71% market share.

All of these products point towards the lucrative option that smart watches have to offer. Also, as the above chart shows, maximum growth is expected in the smart glasses and smart watches segment in the worldwide wearable market.

According to ON World—a research firm—global smart watch shipments are expected to increase from four million units in 2013 to 330 million in 2018.

Intel is strategically shifting its focus towards high-growth markets

According to IDC—a research firm—annual PC shipments are expected to fall 6% from 2014 to 2017. PC shipments are Intel’s core market.

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ARM Holdings (ARMH) dominates the smartphone and tablet markets. It’s quickly expanding into the wearables market. Samsung’s Galaxy Gear watches and Google Glass are powered by ARM-licensed chips. The agility Intel has shown to expand its base in the wearable market shows that it doesn’t want to repeat the mistake it made in mobile computing.

To learn more about how the wearable space is attracting interest from leading players like Salesforce.com, please read Market Realist series, “The Salesforce.com Wear initiative aims to propagate enterprise wearables.”

 

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