Intel cautious about selling wearable devices directly

The acquisition of fitness tracker Basis opens the way in that market, but Intel plans to move slowly

Intel is now a direct seller of wearable devices with the acquisition this week of Basis, a company selling fitness trackers, but the chip maker is taking a cautious approach to selling more products directly.

Intel is primarily looking to grow in the wearable market through chip development, acquisitions and investments, and is also developing a range of prototype head-, wrist- and ankle-wearable devices in an effort to figure out what will most attract consumers, said Mike Bell, vice president and general manager of the New Devices Group at Intel.

Intel will sell the Basis health-tracking wristband, which gives the company a taste of selling directly to customers in the fast-growing wearable health-device market. But Bell said the Basis team also brings key technologies to analyze, collect and present data, which Intel could apply across a range of wearable devices.

"It gives us immediate credibility in the wearable space," Bell said. "The [Basis] team will give us feedback for all the technologies we are developing for this space."

It would be "criminal" to kill Basis' product, Bell said, adding that Intel hasn't decided whether to directly sell more wearable products. At this point, Intel's focus is on delivering the best wearable technology to customers, Bell said.

Intel is also developing wearable prototypes, which third parties will be able to license and bring to market.

"We think we're going to have the best technology for this space. By showing we have the best technology, we'll drive the market," Bell said.

The company has already shown numerous wearable prototype devices such as earpieces, baby garments and smart headsets, and has developed low-power chips like Edison that it wants to put in smart glasses, health monitors and other wearable devices. But the company has historically failed in selling products directly to vendors. It recently failed to develop its own TV service, with the hardware and related technologies sold to Verizon in January.

But one way to grow quickly in the wearable space is through acquisitions and Intel will continue to look at companies that it can invest in or buy, Bell said. Intel has invested in Thalmic Labs, which makes a gestural armband, and Recon Instruments, which makes the Jet heads-up display.

Wearables are not currently self-sufficient, and are heavily tethered and reliant on other devices like mobile phones, Bell said, adding that needs to change.

"Many of the devices are replications of the cellphone screen," Bell said. "As these devices have compute and intelligence, it will be advantageous for the user."

Data could be stored and analyzed on the cloud, which may lead the charge in untethering wearable devices.

Dell is also reaching out to the do-it-yourself community through the "Make It Wearable" challenge, which the company hopes to launch in the coming weeks. A specific number of finalists will get prize money totaling US$1.3 million to turn wearable device ideas into real products. The wearable products will have to be based on Intel's technology, though the company didn't provide specific information on which technology contestants must use.

Intel's goal is to develop a whole set of wearable technologies in-house, which can then drive the market, Bell said.

"For anyone to be successful [in the wearable market] you have to think of how people are going to interact with it," Bell said. "This is something in the longer term that will be valuable for lots of people."

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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