[ad_1]
In 2015, Fossil Group paid $ 260 million to acquire Misfit in one of the largest acquisitions of apparel technologies ever made. The transaction turned into a significant business figure for Fossil, with sales of connected portable equipment reaching $ 300 million in 2017, representing 14% of all watches sold this year. the.
But last January, Fossil announced that it had sold undisclosed intellectual property rights to Google for only $ 40 million. Google then let us know that it had acquired a "new product innovation that has not yet been put on the market".
Essential reading: Smart watches Best Wear OS to buy
This innovation is specifically a hybrid smartwatch technology built by Fossil, according to several sources close to the contract with which Wareable on the agreement of anonymity. Fossil declined to comment on the terms of the agreement. Google said Guerable: "We do not comment on rumors or speculation."
The watch movement, on which Google paid to obtain a license, is designated inside Fossil under the name "Diana" (an amalgam of "digital" and "analog") and was built from the acquired talent by Misfit in 2015. There are variants of & # 39; Diana's, with different designs combining physical intelligence features and digital elements – some with screens, some without – and some sources claim that Google could use one, some or none of those for his own smartwatch, if any.
& # 39; Diana & # 39; consumes much less energy than a conventional smartwatch
But the 40 million dollars also included 20 engineers entrusted to Google, depriving Fossil of many technical talents. Sources said Google was more interested in talent than in technology "Diana", a person who called the agreement "acqui-hire".
According to people familiar with the terms of the agreement, Fossil felt compelled to sell to Google because of the considerable expense incurred to support its engineering talents, as well as the willingness to recover from it. money that had been poured into the development of its own hybrid movements, notably & # 39; Diana, according to some sources, costs considerably more to fossils.
A bad fit
Fossil discovered Misfit in 2015, shortly after the launch of its first smartwatch, the Fossil Q Founder, built with the help of Intel technology (Fossil would later turn to Qualcomm for its processors ). Several sources have described founder Q as a faux pas for Fossil, saying sales were well under 10,000 units.
When Misfit was integrated, the team was tasked with transferring the Bluetooth batteries and other essential components into a new application, but some sources claim that this proved impossible and Fossil was forced to continue supporting the first one. Founder Q Q Fossil Q smartwatch. the app he still owns today, while all the following watches have connected using the new "Fossil" app.
But tensions between Misfit Talent and Fossil were mounting for other reasons: Fossil had underestimated the cost of supporting a technical team and was suddenly paying a lot of high salaries to his newly acquired talent. "A 25-year-old engineer has become director of marketing in Dallas," said a source. "So the director is like, what is this mess?"
Fossil and Misfit also had different philosophies on wearable technology, which only made the tensions worse. Fossil's priority was traditionally a fashion watch company, but some sources claim that it caused friction with the talent of Misfit who proposed to use marketing data and monthly payments in the cloud to create new sources of income. The fossils were pushed back, which caused frustration within the technical team, according to people familiar with these conversations.
Fossil also asked Misfit to scrap a 360 – degree 4K smart camera that he was working on before the acquisition, but Misfit 's employees insisted that the technology could be sold, and the company said. quickly made to Axon Enterprise, producer of TASER devices. The amount was not disclosed, but one source called it "very good money".
You have a 25 year old engineer doing the same thing as a marketing manager in Dallas
At the same time, Fossil was spending "considerable" sums to develop its own hybrid smartwatch moves. In 2018, in order to recover some of the costs related to these movements, Fossil Group has formed a partnership with Citizen. The conditions were that Citizen would use the movements built by Fossil in watches built for other partners, and Fossil would receive royalties for each watch sold.
"Fossil was already buying micromotors from Citizen to carry out its hybrid movements before, and this deal was successful, but over time it became clear that the hybrid business was not a big deal. They needed a greater reach beyond the Fossil brands, "said a source involved in the Fossil-Citizen contract. They also described Fossil's initial move to Citizen as "a terrible model" that Citizen had to rethink before it could be used.
"It was a way for Fossil to expand its hybrid business beyond its brands without having the impression of competing with it," he added.
But that was not enough and Fossil had to recover more losses, so discussions with Google on an agreement began. The agreement, announced earlier this year, gave Google the rights to "Diana".
The movement consumes much less energy than a full smartwatch, according to a source that worked on its construction. Google has paid a license-sharing contract giving it access to "several variations" of this move, as well as software, firmware and mechanical technologies, as well as 20 engineers who worked on these technologies.
They have taken too much and acquired
"It was a terrible deal," said one person involved in the case, who thought Fossil's technology and talent were worth more. They described the rest of San Francisco's Fossil office as a "skeleton team" that exists only to support contracts with Citizen and others. "They bought and bought too much. It was too much operating expense, "they said. "So instead of having to lay off 50, 80 people or whatever, they did this business."
The sale to Google has left Fossil a much lighter operating model, with fewer engineers and many remaining technicians based in its Vietnam office.
Shortly after the announcement of the $ 40 million deal with Google, said Greg McKelvey, executive vice president and strategy and digital director of Fossil Group. Wareable"The Fossil Group will market the product across all of our brands, over time, and then using Google's methods, the technology will be extended to the entire industry to benefit everyone. . "
Rumors have long ago that Google is working on a "Pixel Watch", and this acquisition certainly adds fuel to the fire. This is Google's biggest signal so far, but its interest in building its own hardware, but it's unclear whether "Diana" will become Pixel Watch or whether Google will partially exploit the technology for its own devices.
[ad_2]
Source link