Until now, Google (NASDAQ:GOOGL) didn't have a clear path to get its Google Glass to market at meaningful scale. But that just changed. Luxottica Group SpA (OTC:LUXTY) just announced that it will be designing, developing, and distributing new versions of Google's web-connected Google Glass. With both Oakley and Ray-Ban under Luxottica's umbrella of brands, the agreement paves a way for mainstream consumer distribution of Google Glass. Following an announcement last week of Google Wear, an Android platform dedicated to wearable devices, it's clear that Google sees a bright future in wearable technology.
The agreement between Google and Luxottica benefits both companies.
For Luxottica, it gets a fresh new product for its Ray-Ban and Oakley brands that will likely boast a premium price. The company will bring its first Google Glass products to market in 2014, according to La Repubblica (via the Associated Press). Luxottica CEO Andrea Guerra, apparently has confidence in its plans with Google Glass; he told the daily La Repubblica that it would "help guarantee the eyewear maker annual growth of 5% to 10%."
Google benefits tremendously. Not only will Google Glass get instant fashion appeal, but it also gets access to Luxottica's industry-leading distribution. The company led the industry in 2012 with 12.4% market share, according to The Wall Street Journal. With the help of its expansive retail outlets,
Google Glass will be offered in more than 5,000 stores in the U.S., Guerra told the Journal.
Google's entire Android Wear platform may also benefit indirectly from this arrangement for Google Glass. The idea of wearing web-connected devices is still a new and unproven concept. Oakley and Ray-Ban branded Google Glass could serve as one small step to help consumers more readily except the growing connection between wearable technology and fashion.
But don't be fooled; Google is not a product company
While Google does have a number of products for sale, the majority of its operating profits all stem from online advertising. Google Glass wasn't even important enough to get one mention in the company's 2013 annual 10-K filing. Advertising, of course, was mentioned 188 times. Of its ex-Motorola revenues in 2013, 91% of revenue came from advertising.
So what should Google investors make of the company's aggressive move into wearables? While it's good to see Google moving into the space faster than it moved into smartphones, any potential upside that could result from this unproven space is just speculation at this point. But that doesn't mean Google's aggressive wearables strategy isn't good news for investors. At the least, it helps fortify the company's position as an innovative and dominating force in online information. A presence on more devices means more information. And more information, of course, is always a good thing for Google's advertising business.