Which Company Has the Most to Gain in Wearable Technology?http://www.fool.com/investing/general/2014/03/22/which-company-has-the-most-to-gain-in-wearable-tec.aspx Brian Nichols
March 22, 2014
Google (NASDAQ: GOOG) likely had its pick of retail partners for its Android Wear line, but chose Fossil (NASDAQ: FOSL). Hence, Google has now officially beaten Apple (NASDAQ: AAPL) to the punch in this space. However, of those involved, who has the most to gain from Android Wear?
Why is wearable technology so important?
According to The Statistics Portal, the market for wearable devices last year was $2.5 billion, but will reach $12.6 billion by 2018, possibly $15 billion. Moreover, 1.6 million wearable device shipments were made last year, a number that could top 40 million worldwide in the next four years. Thus, it is easy to see why tech giants are so eager to control a large piece of the pie, and it's because of this eagerness that analysts are projecting such bright days for the wearable space.
With that said, Google has a big jump on Apple. Last year, Samsung launched Galaxy Gear with Android technology, which according to research firm Canalys, commanded a 54% market share of the wearable device market.
Historically, Google has licensed its operating system to developers, but with its Fossil partnership, the company is showing a desire to be directly involved in the monetization of wearable devices. This leads to Android Wear, a technology initially implemented with wrist watches that respond to voice, monitor health and fitness, control other Android devices, message, access news, and much more.
According to Google, the partnership with Fossil is still in the early stages of development, but with the announcement being made, it appears Google is much further along than Apple. While there have been many alleged photos of the iWatch, Apple has yet to announce anything of substance regarding the release.
Google & Apple: Which needs wearable technology?
For Google, wearable devices is a game-changer, although much will depend on its revenue sharing program and future collaborations. Hence, as Google partners with retail companies, let's award it a fundamentally accruable 30% share of the same $15 billion future market.
With Google's $60 billion in annual sales, wearable devices could account for 7.5% of current revenue. Clearly, that's a much larger percentage than that of Apple, and is likely why Google has been so aggressive.
The real beneficiary