How the Basis Smartwatch Fits Into Intel's Wearable Plans

Intel needs to expand its wearable tech knowledge, and buying Basis Science could do the trick.

Mar 6, 2014 at 8:00PM

Intel (NASDAQ:INTC) has been clear about its wearable ambitions lately, going so far as to show off some of its wearable tech ideas at the Consumer Electronics Show earlier this year. But the company just took a significantly more concrete step forward in the space, if a new report proves true.

Why Basis and why now
Multiple sources have told TechCrunch that Intel paid between $100 million and $150 million for the wearable fitness tracker company Basis Science, though Intel hasn't confirmed this yet. The company has just one product, the Health Tracker watch, but its market share in the fitness tracker space is 7%. That may not seem high, but in a burgeoning market it's enough for Intel to gain some relevant knowledge in the space.

Intel Basis Smartwatch

Source: Basis Science.

The smartwatch does what many other fitness tracking devices do: measure steps, calories burned, heart rate, and even tell how well a user is sleeping. There's already some stiff competition for the Basis watch. Jawbone, which commands about 21% of the fitness tracking market, has a device with similar features. But that shouldn't matter much to Intel.

Selling wearable devices isn't exactly Intel's ambition.

Acquiring the team and technology at Basis would give Intel the opportunity to test its chip designs in proven wearable devices, but also allow the company to try out new ways of testing ARM Holdings technology on wearable software. Though Intel's x86 chip architecture competes with ARM's tech, Intel announced back in October that it would start building ARM processors and even used some of the tech in its wearable tech at CES.

Intel spokesman Bill Calder told CNET back in January that, "The goal is to get into the market as fast as possible with innovative designs and technologies. If that means using a third-party [chip] that's customized by Intel with all the software and product integration done by Intel ... then we'll do it."

Intel wants in on the wearables industry, even if its own chips aren't at the core of it, and even if it means purchasing a wearable fitness tracking company. Intel is determined not to miss out on wearables like it did with mobile. The company has struggled against competitors including Qualcomm, which dominates much of the mobile chip industry.

Tapping into Basis' device, and being willing to use ARM in devices, should allow Intel to stay competitive as the wearable industry takes off.

Foolish thoughts
Intel (reportedly) buying Basis gives the chipmaker a proven road into wearable tech -- which Intel needs. Up to this point the company had little more than a few prototypes and the announced of its tiny Quark chip running on the Edison board. Quark may help the company eventually power wearable tech, along with the Internet of Things, but the Basis acquisition propels Intel into the mix right now.

Investors shouldn't expect the company to start selling Intel-branded fitness trackers anytime soon, but can be pleased that the company is making serious moves to position itself firmly in the wearables space. It's still early in this game, and Intel is already fixated on not missing the next tech revolution.

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Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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