Google Inc. Is Risking Getting Locked Out of Wearables

When Google released Android as open-source software for all to use as they wish, it couldn't have predicted that its hardware partners would bypass a lot of Google's main services. Since its initial release, Google has made moves to exercise more control over the more beefed-up version of Android -- which includes Google's APIs -- that it typically licenses to smartphone and tablet manufacturers.

Samsung's Gear 2 runs Tizen instead of Android. Source: Samsung.

With Android Wear, Google seems determined to not make the same mistake twice. Android Wear is significantly more closed than Android for smartphones and tablets, which has made several OEMs wary of adopting the OS. Samsung uses its homegrown Tizen OS for most of its smartwatches. LG's latest effort features its own Wearable Platform OS based on the WebOS property it acquired from Palm. And Taiwanese manufacturer Asus has already announced plans to move away from Android Wear in a future wearable.

Analysts expect the impending release of the Apple Watch to spark the wearables market as a whole, and Google is risking getting locked out by not opening up its Android Wear platform.

Why Google can't strong-arm smartwatches like smartphonesSamsung has feuded with Google in the past over how much control Google tried to exercise over its implementation of Android. Samsung uses its TouchWiz UI to separate its version of Android from the competition, and Google was unhappy about Samsung moving some Google apps around. As a result, Samsung started developing its own fork of the Android OS using the open-source version and called it Tizen.

Samsung has released just one smartphone using Tizen, despite multiple plans to launch phones running the OS since 2013. The Z1 is a low-end smartphone sold in India for 5,700 rupees (about $90). It's not the high-end device Samsung previously planned, and it's not a huge threat to Google's control over Samsung's smartphone business.

The biggest thing holding Tizen back is a lack of developers willing to make apps for an unproven operating system. Samsung and the other companies behind Tizen have offered incentives to developers, but its app store still pales in comparison with the million-plus apps available on Google Play and Apple's App Store.

But in wearables, everyone's starting from a nearly blank slate. And apps need to be more closely integrated with the operating system to provide additional functionality over a smartphone app. As a result, manufacturers want to exercise more control over the operating system, and Android Wear simply doesn't allow that. That's why we're seeing OEMs experiment with alternative operating systems.

With Android Wear, Google is looking to take advantage of the fact that apps are more closely tied to the OS to promote its own services. So things like Google voice search, Android Pay, Google Fit, Gmail, and Hangouts are more likely to be used on Android Wear over the manufacturer's versions of those services.

What's at risk?The wearable market is still relatively small compared with the sizable smartphone and tablet markets. Analysts expect the market to grow significantly behind the momentum created by the upcoming Apple Watch.

Last year, just 720,000 smartwatches sold implemented Android Wear. Samsung alone outsold all of Google's OEM partners, with 1.2 million smartwatches shipped, most of which run Tizen. Overall, Canalys estimates that just 4.6 million "smart wearable bands" were sold in 2014.

Juniper Research expects the Apple Watch to take wearables mainstream and set the market to grow nearly 12 times over from 2014 to 2019. Google may miss out on the opportunity to be part of that growth if it doesn't open Android Wear at least a little bit and let manufacturers work with it instead of against it.

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Adam Levy owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). 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.

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