Fossil Group Inc. (NASDAQ: FOSL) has announced reaching a deal to sell smartwatch technology valued at $40 million to Alphabet’s Google Inc. (NASDAQ: GOOGL). The deal apparently pertains to “a smartwatch technology currently under development,” according to the released statement. Fossil said the transaction is expected to close in January.
Fossil Group owns and licenses 14 brands covering fashion watches, jewelry, handbags, small leather goods, and wearables. The company has successfully developed an extensive wholesale distribution network that includes approximately 500 retail locations in 150 countries. Its brands include Armani, Kate Spade, Misfit, Skagen, Michael Kors, Marc Jacobs, and Fossil itself, as well as several others.
While wearables in general have been a difficult industry to crack, Fossil has succeeded by focusing on reasonably priced, fitness-focused products. The company has used Google’s Wear OS for its own smartwatch products. Google’s Wear OS software competes with the Apple Watch and has struggled to increase its adoption.
Fossil EVP Greg McKelvey 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.”
In addition to the new software, the deal apparently also involves part of Fossil’s research and development team. Fossil will transfer of a number of the employees currently working on the software in development to team Google. Fossil made sure to note in its statement that it will still retain more than 200 R&D team members to focus on innovation and product development.
Stacey Burr, vice president of product management, Wear OS by Google, said, “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.” Shares of Fossil rose about 8 percent on the news.