Google (NASDAQ:GOOG) (NASDAQ:GOOGL) recently unveiled a touch-sensitive fabric, code-named Project Jacquard, at its annual I/O developer conference in San Francisco.

The fabric, which contains sensor-laden "conductive fibers," detects touches and swipes like a touchscreen and sends commands to a mobile device. According to Google, the conductive fibers are so thin that they can be woven into any type of woven textile.

Project Jacquard. Photo: Google.

Project Jacquard sounds like another one of Google's "moonshots," but Levi Strauss recently announced that it would partner with Google to turn the smart fabric into marketable clothing. Speaking to The Verge, Levi Strauss Vice President for Innovation Paul Dillinger called Jacquard a "dazzling opportunity" for the two Bay Area companies to work together.

The business of smart clothes
Google and Levi's aren't the first companies to try to make "smart" clothing. Last year, Intel CEO Brian Krzanich unveiled a sensor-laden shirt that could report a user's heart rate to a mobile device.

A start-up called Athos also makes clothes that measure heart rate, steps, and muscle effort during workouts. By using micro-EMG sensors, the shirt and pants detect which muscles are working the hardest, then deliver that data like a heat map to a mobile app.

The tech is impressive, but the entire outfit (pants, shirt, and a "Core" that houses a Bluetooth chip and motion sensors) costs about $400. Under Armour once tried to develop a similar smart shirt, but the project eventually evolved into a simple heart rate monitoring chest strap.

Athos' smart apparel. Source: Athos.

OMsignal makes similar clothing that can continuously measure heart rate and breathing through a black box on the side of the shirt. Another company, Sensoria, produces sensor-laden socks and a companion anklet that measure foot pressure while running. These devices also aren't cheap -- one OMsignal shirt and the companion box costs at least $240, while two pairs of Sensoria's socks and the anklet cost $199.

All of these products share three common problems. They're aimed at hard-core athletes, they have too many parts, and they're too expensive to become mainstream products.

How Google and Levi's could force the market to evolve
That's where Google and Levi's come in. Instead of tracking biometric data for hard-core athletes, the two companies could develop smart clothes for mainstream consumers.

Levi's Dillinger told WWD that the partnership was a "platforming opportunity," and that "the input is the gesture -- crossing your legs, swiping, waving, lifting" -- which can be used to control a mobile device. Unlike Athos' Core or OMsignal's black box, Levi's power source and Bluetooth connector is the size of a regular button. Combining that button with Google's fabric could make smart clothes look identical to normal clothing.

Project Jacquard. Source: Google.

Levi's and Google haven't discussed possible applications in detail, but they're easy to see. For example, features that companies are cramming onto smartwatches -- such as music control or answering calls -- could be seamlessly woven into the sleeve of a jacket. If augmented reality glasses become more widely accepted, users could navigate the UI by touching or swiping their sleeves.

What smart clothes would mean for Google
Project Jacquard could either complement Android Wear or render it obsolete. If smart clothes catch on over the next few years, the need for smartwatches as smartphone remotes might decline. But if the smartwatch market continues growing, Project Jacquard could become an extension of Android Wear, allowing smartwatches to gather data directly from a user's clothing.

If Google can turn clothing into a "platform," it could mount an Android-like takeover of the textile industry. This means that any apparel maker looking for a quick way to connect its clothes to smartphones or smartwatches could license Google's conductive fibers. As a result, Google could gain more retail partners, new ways to track user data, and maybe even a new source of revenue.

The key takeaways
The idea of Google leaping out of electronic devices and onto your clothes is a bit unsettling, but it could happen in the near future. Research firm Gartner believes that annual shipments of smart garments will surge from 0.1 million in 2014 to 26 million in 2016.

But before getting ahead of ourselves, we should realize that two big issues could derail that growth. First, more advanced fitness trackers and smartwatches could reduce the need for smart clothes. Second, smart clothes must be competitively priced against regular clothing, otherwise they'll likely remain niche products for gadget geeks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.