Intel (INTC +4.36%) is developing a $1,000 luxury smart bracelet known as MICA, an acronym for "My Intelligent Communication Accessory," aimed squarely at affluent women.
Intel's MICA. Source: Intel.
While Intel hasn't yet revealed the full specifications and features of the device, it will reportedly provide smartphone notifications on a curved, sapphire glass touchscreen display. Like Samsung's (NASDAQOTH: SSNLF) recently unveiled Galaxy Gear S, it will be equipped with a 3G radio and can be charged either wirelessly or via USB. MICA will comes in two styles -- white snakeskin and obsidian, or black snakeskin with pearls. Intel will market the device through a partnership with high-end fashion retailer Opening Ceremony.
Intel is scheduled to reveal more details about MICA in October and to officially launch the device at Opening Ceremony's spring and summer 2015 fashion show in New York. According to CNET, the device will cost under $1,000 at Barneys and Opening Ceremony stores.
The untested market of high-end luxury devices
Although MICA is obviously an experimental product, it raises some interesting questions about the high-end wearables market.
According to NPD's Wearable Technology survey, which tracked sales data between October 2013 and May 2014, the average cost of a fitness band or smartwatch in the U.S. was $189. Samsung controls roughly 71% of the smartwatch market, according to Strategy Analytics, thanks to its wide range of smartwatches that dominate the $150 to $300 price range.
The market above $300 is currently uncharted territory. The most high-profile device in that price range, Apple's (AAPL +1.18%) $350 Watch, won't arrive until next year. Hewlett-Packard (HPQ +1.23%) is working on a high-end smartwatch with online retailer Gilt, but the price is yet unknown. Start-up Kairos is developing a traditional mechanical watch that sends notifications via a transparent OLED screen on the watch face. Kairos is accepting pre-orders for the watches, which cost between $499 and $1,199.
Apple's Watch. Source: Apple.
Will the wearables and luxury markets converge?
The high-end wearables market is untested, but we can still compare the growth trajectory of the wearables and high-end jewelry markets.
Research firm ON World said it expects wearables shipments to rise from 4 million in 2013 to 330 million by the end of 2018. However, ON World also noted that only 8% of 1,000 respondents in one survey said they were willing to buy a health-tracking wearable device for over $299. That suggests $300 is the ceiling for smartwatches, but it doesn't necessarily mean that there won't be demand for high-end luxury bracelets that are considered fashion accessories instead of fitness trackers.
McKinsey estimates that between now and 2020, the global jewelry industry will grow at a rate of 5% to 6% annually. In 2003, branded jewelry -- like Tiffany and Cartier -- only accounted for 10% of that market. In 2011, that percentage doubled to 20%, and McKinsey expects it to rise to 30%-40% by 2020. This means recognizable name brand jewelry will outpace the growth of the overall industry. Therefore, it makes sense to test out branded luxury wearable devices to tap into both markets, as Intel and Opening Ceremony are trying to do.
Other high-end retailers have recently experimented with blending the two markets. Ralph Lauren (RL +3.37%) unveiled a "smart shirt" with sensors that can send biometric data to a user's smartphone. Tory Burch has partnered with Fitbit to design exclusive fashion accessories, which can cost up to $195, for the company's Flex fitness bands.
Tory Burch's metal-hinged bracelet for Fitbit Flex (L) and the Fitbit Metal Fret Pendant (R). Source: Tory Burch.
How wearable luxury fits into Intel's long-term strategies
Over the past year, Intel has made major moves into the wearable devices industry.
At the Consumer Electronics Show in January, the company unveiled Edison, a SD card-sized computer that could theoretically be placed in chairs, coffee cups, or baby monitors to connect them to the Internet of Things. In March, the company acquired Basis, which makes fitness bands that use optical and skin sensors to take biometric readings. Last month, Intel announced a partnership with SMS Audio, which is majority-owned by rapper 50 Cent, to produce biometric earbuds that can continuously track heart rate, distance traveled, and calories burned. Earlier this month, Intel signed a deal with Fossil to design fashionable wearable devices. The upcoming launch of MICA is yet another way for Intel to expand its presence in the wearables market.
If these efforts fail, they won't impact Intel's core microprocessor business. But if they succeed, Intel could gain a valuable edge over rival ARM Holdings, which has expanded quickly into the wearables market by licensing chips for Samsung's smartwatches and Google Glass.
The Foolish takeaway
Intel's MICA is clearly a bold test to see if consumers are willing to pay $1,000 for a wearable device.
If the MICA is even moderately successful when it arrives next year, I believe that more partnerships between tech companies and upscale fashion retailers will emerge. If it fails, Apple's cheaper Watch will likely define the upper price range of wearable devices instead.
In my opinion, Intel's MICA should generate enough positive buzz -- thanks to the growing demand for branded luxury jewelry and the rising demand for smartwatches -- to convince other companies to test the waters with their own high-end wearable devices.
