Google Inc: Will Chic Sell Wearables?

The search giant enlists top fashion designers In an effort to go mainstream with its futuristic glasses.

Jun 24, 2014 at 3:00PM

Those fascinating, sort of creepy, but definitely futuristic glasses from Google (NASDAQ:GOOG) (NASDAQ:GOOGL) have been a long time coming. Google's Glass initiative began three years ago, and isn't finished yet. After cracking the Glass door open for a select few a couple months ago, Google followed that up last month by offering Glass -- for a whopping $1,500 -- to any and all interested.

Setting cost aside for a moment, there are some real questions that Google needs to answer about Glass. Google and innovation seem to go hand-in-hand, as evidenced by self-driving cars, drones, and those bizarre balloons used in its Project Loon campaign to bring Internet to the under-served masses. Glass, even as it continues to expand its capabilities as more app developers get on board, is nothing if not innovative. The question is: can Glass actually make an impact on Google's bottom line?

How big is big?
When it comes to technology, there always seems to be "the next big thing." Cloud, big data, and the Internet of Things come immediately to mind. But if estimates for continued growth in the wearables market turn out to be anywhere close, Google Glass and the long-rumored iWatches from Apple (NASDAQ:AAPL) are two tech behemoths that could make a significant dent.

How fast is the wearable market growing? In the first half of last year 200,000 wearable devices were sold. In the last six months of 2013, consumers purchased 1.6 million wearable devices, and that rocket-like growth isn't expected to slow anytime soon. According to the research firm Canalys, smart bands alone will sell an estimated 8 million units this year, and nearly triple to 23 million by 2015.

Going mainstream
For Apple, an iWatch can't come soon enough. Chief Executive Officer Tim Cook and team are due for a splashy introduction to appease edgy investors, and an industry that is quickly running out of patience. The impression, right or wrong, that Apple has lost its mojo as the world's leading developer of cutting-edge, life-altering gadgets continues to pressure its stock. And the rumored iWatch, expected this October, could be just what the investment doctor ordered.

In addition to heart rate monitors, most of the 10 or so sensors expected to be included in Apple's iWatch will be health-related. But in addition to the smart band-like functionality, the iWatch is rumored to come with multiple screen sizes dependent on consumer's taste and wrist size, with some expected to be as large as 2.5 inches.

Glass, on the other hand, is in a wearables world of its own for the time being. Though not the only smart glass alternative on the market, Google, not-surprisingly, has the scale and industry pull to push other Glass wannabes to the curb.

When Glass was first introduced, it seemed as if we were getting a glimpse of a Jetsons-like future. The immediate applications of Google Glass were commercial and industrial. Many pundits envisioned Glass assisting medical professionals, and the manufacturing and construction industries, along with educational applications. But is your average, every-day consumer going to strut around town with those odd looking "things" on their head? Google likes to think so, and they're taking steps to go mainstream.

Google recently announced its Glasses are now available with stylish new frames designed by fashion maven Diane von Furstenberg. And Glass aficionados will soon be able to pick shades from Oakley, Ray-Ban and other leading manufacturers. For the average Glass user, style matters: at least, that's what Google wants to believe.

Final Foolish thoughts
Some analysts predict Glass will fly off the shelves, suggesting as many as 21 million units will sell in 2018, up from just under 1 million this year. There's only one way sky-high projections like those will come to fruition, and that's by Google successfully marketing Glass to Mr. and Mrs. Consumer. Many bemoan its $1,500 price tag, but don't be surprised when Google drops the price to make it available to mainstream users.

No word on what Apple intends to charge for its iWatch, assuming it comes to fruition, but you can bet it won't be $1,500. And somehow a smart watch, particularly as it gets even smarter with future iterations, seems much less intrusive than Google Glass, let alone much less expensive. Of course, Glass can do a lot more than a smart watch, but for it to make an impact on Google's bottom line, it needs to win over consumers. Designer frames are nice, but is that enough for the everyday user to jump on board? Don't count on it.

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Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). 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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