Intel Ignores History With Wearables Buy

27 March 2014

Intel Corp. (Santa Clara, Calif.) has added its own fuel to the dotcom bubble 2.0 that is building – it should know better.

Intel has just paid about $100 million to acquire Basis Science Inc. (San Francisco, Calif.), a maker of wrist-worn monitors that was founded in 2010. Apparently, Intel won out in auction against the likes of Google which itself has promised to pay a staggering $3.2 billion for a thermostat startup formed by escapees from Apple (see Google to Pay $3.2 Billion for Thermostat Startup)

It has been much reported that wearables were the theme of the year at the Consumer Electronics Show in Las Vegas last January but this is a notoriously forward looking event that is in essence an exercise in trying to partly guess and partly drive consumer appetites. Often they get it wrong.

For example, the television makers want to sell televisions on a two-year cycle rather than the 10-year cycle they had been on. They prepared 3D sets, said 3D is the next must-have feature and rubbed their hands expectantly. Consumers thought otherwise. In fact, if anything the renewal cycle on PCs has slowed to match that of televisions.

Which of course part Intel's problem. And why the company, having missed out on the mobile phone, is mad-keen to design chips for what it thinks is the next wave of high volume equipment.

But what sort of wearable equipment are we talking about? When pushed marketeers start to effuse about well-being or sports data uploaded to your smartphone. Is that it?

So when the consumer electronics industry say wearable equipment is cool, from step counters and heartbeat monitors to Google Glasses, one needs to be circumspect. The vast majority of consumers may say something completely different. That is apart from a few early adopting technophiles who would jump of a cliff if Apple said it was the thing to do.

Intel's strategy is to pursue a range of wearable products with goal of encouraging others to use its chips in their wearable products. Of course Intel is competing with its potential customers and this might persuade those hell-bent on entering the wearable equipment market on trying to find any solution but Intel's to its chip needs. Otherwise they are likely to be behind Basis in the technology line.

But put that to one side. This has all happened before and it did not end well for Intel. Back in the 1970s the LED watch was invented and considered a marvelous consumer application of semiconductor technology. Intel decided to get into the watch business with the acquisition of Microma in 1972. And it got out in 1974 having blown millions of dollars to no effect.

The fact was the semiconductor industry wanted the LED watch to succeed and did everything they could to make it fashionable – including James Bond product placement. Meanwhile most consumers thought it was too expensive, looked clunky and realized that you needed your other hand free to push the button and power up the LED display, which was inferior to the analog display mechanical watches of the day.

I am not saying people will not be wearing items with electronics in them – but I saying I have yet to see an application that would justify the additional weight.

And as an afterthought who was one of the companies that put money into Basis Science and helped propel it to the point of being acquired? You guessed it. Intel Capital. You could call it consistency or say that Intel is at risk of believing its own hype.

Related links and articles:

Google to Pay $3.2 Billion for Thermostat Startup

Wearables to Add $70 Million to Battery Sales by 2018

Intel Launches Low-Power Processors for Wearables, IoT

If Google Glass Is a Hit, Can Contacts Be Far Behind?

Startup Preps OS for the Internet of Things

Freescale, Oracle Team on Secure Platform for IoT

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