Whenever Intel (NASDAQ: INTC) makes an acquisition or branches into new businesses outside of its main one, the company ends up disappointing shareholders. This time, it is with health wearables. On July 20, the company was rumored to close down its health wearables division.
Investors should not get too worked up on another Intel disappointment. The company did not mention wearables much in the last few years. Fitbit’s (NYSE: FIT) rise and fall is a strong data point indicating the trend for such products is waning. Apple (NASDAQ: AAPL), through its Watch and Samsung, through its smart watch, are taking market share. Embedding health tracking in smart watches makes better sense.
Wearable health devices face two problems. First, consumers are spending more time on the couch watching Netflix (NASDAQ: NFLX) content instead of doing active things. Second, the market is saturated. Fitbit could not grow any further in North America that it had to expand globally. That soaks up market share for Intel.
Investors may accept Intel’s latest disappointment as it moves towards autonomous driving technology. Still, Mobileye is an expensive acquisition that may not play out if the unit does not stay ahead of its competitors
