Apple (NASDAQ:AAPL) wasn't the first company to release a smartwatch, but it was the first to offer a luxury model.
Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) hardware partners had released a wide variety of Android Wear devices prior to Apple Watch's debut, but none of them were aimed at the luxury market. Priced at $299, the LG G Watch R was relatively expensive for an entry-level watch, but a far cry from the premium watches offered by the likes of Rolex. Apple, however, has gone there: the Apple Watch Edition starts at $10,000 and tops out at $17,000.
Luxury watches don't sell in large numbers, especially compared to smartphones, but the lack of a competing offering could hurt Google's Android Wear ecosystem, especially as it continues to grow and evolve. Fortunately, Google has its answer coming this fall.
TAG Heuer, Google, and Intel
TAG Heuer will release an Android Wear-powered smartwatch later this year. The Swiss watchmaker is a subsidiary of French luxury goods giant LVMH, and is one of the oldest and most widely known luxury watch brands. Its upcoming Android Wear watch will be priced at $1,400 -- cheap compared to some of its other watches, which retail for upwards of $18,000.
TAG Heuer's CEO, Jean-Claude Biver, has been an outspoken critic of the Apple Watch. Before he announced his company's partnership with Google, he slammed the Apple Watch's design, declaring that it "looked like it was designed by a student in their first trimester." Later, he softened a bit, saying that he hoped Apple sold "millions and millions and millions of them," but only as a way to popularize wristwatches, and eventually drive more buyers to TAG Heuer.
The final version of TAG Heuer's smartwatch has yet to be unveiled, but it could serve as strong competition to the more expensive Apple Watch models, at least in terms of design. Fashion preferences are certainly subjective, but TAG Heuer's brand is well established and respected. If its 155-year history is any indication, its upcoming smartwatch seems likely to be quite fashionable.
TAG Heuer is staying out of the tech side entirely. It will use the standard Android Wear operating system, and power the watch with chips from Intel. The watch will allegedly offer 40 hours of battery life -- about twice what Apple Watch offers -- but that's not unusual for Android Wear. Several Android Wear watches, including the G Watch R, offer similar performance.
The Android story repeats itself
TAG Heuer isn't the only traditional watch maker backing Google's platform. Fossil is also set to launch an Android Wear watch later this year. Fossil is far from a luxury brand -- almost all of its watches retail for less than $500 -- but it may still give Google an advantage. Google's hardware partners have tried to offer better designs, but many of the Android Wear watches unveiled so far are still simple and blocky. A company that puts design first could offer something much more attractive.
Smartwatches as a whole are still in their early days, and it's not clear yet if they will ever truly achieve mainstream success. But if they do, and if they begin taking share from the traditional watch market, Google could find itself with many more hardware partners.
"It would be absurd, it would be arrogant to believe that we could develop our own [operating system]," Biver said, discussing his company's forthcoming Android Wear watch (via BBC). "Google is not producing watches, so the relationship is perfect."
Other watch makers could eventually come to a similar conclusion. As with smartphones, the same story could be about to repeat itself with smartwatches: many different watch companies, united around Google's operating system, competing with Apple and its integrated model.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Fossil, Google (A shares), Google (C shares), and Intel. 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.