SAN FRANCISCO — Onstage at Intel’s annual developer conference, CEO Brian Krzanich held up an ugly hunk of metal, a wristband that looked like it had been based on a medieval shackle.
“This is what happens when engineers design a product,” he said, at the Intel Developers Forum on Tuesday. Tossing the prototype aside, Krzanich picked up the finished result, called MICA, a flashy wristband aimed at the luxury-accessory market. It carries cellular connectivity and a touchscreen display crafted from hard-to-scratch sapphire. The device will come in two styles — the first contains pearls from China, black water-snake skin and gemstones from Madagascar; while the other incorporates South African tiger’s eye, white water-snake skin and obsidian from Russia.
“This is something everybody wants to wear, that you want to wear independent of the tech that’s inside, and when you realize the tech that is inside, you’ve got to have it,” Krzanich said.
The MICA, which will be sold at luxury retailer Barneys, was designed in partnership with fashion house Opening Ceremony. The device is a prime example of how Intel is approaching the nascent wearable-technology market: not like Apple or Samsung, which design their own software and hardware for the devices they’ll sell, but by building chips and designing prototypes that help partners quickly release their own products.
Intel isn’t in the business of selling its own wearables or smartphones or computers. It just wants its customers to release the best devices possible — all running an Intel chip, of course.
“This is what IDF is all about,” Krzanich said. “Partnering, learning how we can work together and building better products.”
Becoming a platform partner
Less than two years ago, wearables largely were reserved for gadget enthusiasts and the tech companies naive enough to think mainstream consumers would want to wear Google’s Glass headset on their faces or coaster-size screens on their wrists. Yet in 2014, Samsung launched five different smartwatches, Google is making noise about its Android Wear wearable platform, and Apple has announced plans to enter the smartwatch market with Apple Watch.
On the opposite side, Fossil and Timex want to smarten up their timepieces, while fashion houses and jewelry makers are seeing huge potential in marketing armbands and necklaces to shoppers. Even earbuds and shirts are being outfitted with sensors that track our fitness levels and read our heart rates. The only problem: None of the traditional companies in those markets can develop and manufacture a wearable that works.
The dominant PC component supplier, Intel has built its business around being at the forefront of technological advancements. Its current processors use a more advanced manufacturing technique than rival chips from Qualcomm and others, keeping its big customers dependent on its line of microchips. But it also has struggled in making chips energy efficient enough for smartphones and other mobile devices.
With wearables, Intel is getting in early so it doesn’t lose the race before it even starts, avoiding the hurdles it now faces with smartphones. “They don’t want to discover, three years later, that something is happening,” said Roger Kay, principal analyst with Endpoint Technologies.
Intel has an opportunity to help define what smartwatches and other wearables should be like. But it also has decided to let its partners — companies that design and sell watches, headsets and other accessories — figure out the fashion while Intel figures out the tech.
They’re saying, “you guys, the watch experts and others, tell us what you think ought to happen,” Kay said.
Intel has already made inroads, though none of the projects are quite yet mainstream. Beyond the MICA, the company has done numerous proof-of-concepts and has just begun hammering out extensive partnerships with both established brands and manufacturers that can benefit from a symbiotic relationship with the chipmaker. For fitness tracking earbuds, Intel teamed up with rapper 50 Cent’s SMS Audio to build BioSport headphones. For smart-shirt prototypes, Intel worked with Taiwan-based electronic textile manufacturer AIQ. Intel is now also in partnership with Fossil, one of the leading watchmakers in the US, to further capture the smartwatch market it began pursuing with its purchase of Basis Science last year.
“This strategy has defined why Intel and companies like Microsoft and Google have been able to move to dominance,” said tech analyst Rob Enderle, president of the Enderle Group. “They aren’t defined by their resources, but by the massive resources of their partners. And no matter how big and powerful a company is, there are often a group of companies that collectively are more powerful.”
Intel has also developed a specialized microcomputer, Edison, that utilizes a special processor the company designed for wearables and other devices, called Quark. Not only has the microcomputer made its way into wearable concepts for big brands — powering items like sensor-laden hardhats and shirts — but Edison also makes Intel a friendly partner to startups and the 3D printer-savvy maker crowd building DIY electronics. Edison microcomputers have been used to power drones, robots and 3D-printed toy cars, the company said.
“If you want to build something, doing your own board is expensive and time consuming,” says Mike Bell, head of new devices at Intel. “We’ve produced a fully power-managed operating system for this chip, and you can literally build something and go to market in months.”
Wading into wearables with skepticism
Intel’s wearable strategy is as much about extending its processor DNA into wearables as it is an admission that Intel can’t — perhaps as Apple may have done — design products that everyday consumers will want to wear. Apple has gone so far as to hire Paul Deneve, former chief executive of Yves Saint Laurent, and world-famous watch designer and contemporary artist Marc Newson to bring the design and fashion expertise in-house.
“As a tech company, we’re not so arrogant as to think we know what the end user will want,” Intel’s Bell said. “So we think it’s important to partner with Barneys and Fossil who have the perspective, and we take their learning and knowledge and we marry it to our technology.”
Apple has thrived on owning the whole process for its products, from development and manufacturing to retail and marketing. It’s used that approach across every product category it’s entered, from MP3 players, with the iPod, to smartphones and tablets, with the iPhone and iPad. That’s allowed those devices to became market leaders in their respective categories, establishing Apple as a company that can successfully energize a new industry.
The question is whether the Apple Watch, due out in 2015, can do to wearables what Apple’s previous products have achieved. For Kay, who’s skeptical that any technology company truly understands what a wearable should be like and which functions it should perform, the iPhone maker may not have another home run on its hands.
“I feel like Apple’s DNA is not to enter the market until there’s really a market there,” Kay said. “And the Apple Watch is a little off that playbook. They’re jumping in a little early. But I’ve made this mistake before with Apple.”
That makes Intel’s conservative approach more careful than it is bold, Kay said. “If I were Intel, I’m not sure I would risk my career on a watch,” he said.
Intel executives are also skeptical of the strategy being used with the Apple Watch and Samsung’s Gear line. “For six months, taping a smartphone to your wrist is what they’re doing,” Bell said. “We’re partnering with people to figure out how to incorporate tech into wearables in such a way that it’s not gratuitous.”
Whatever the roadmap for wearables, Apple’s device has added momentum to the market, analysts say. That means Intel’s strategy will be tested against tech’s largest device makers, all of whom are attempting to push out a product that everyday consumers will obsess over like we do smartphones. Enderle thinks that even as Intel brokers these numerous partnerships simultaneously across a vast number of form factors and markets, the company is equipped to handle it.
“It is far easier to execute a strategy if it is contained within a firm, because coordinating a lot of companies is worse than herding cats,” the analyst said. “Fortunately Intel is expert at this, but few other companies are.”