Exclusive: Inside Intel’s huge secret flop

Original photo by Pexels.

You may never again see a wearable gadget from Intel. Not in the near future, at least. The global tech giant is pulling the shutter on its wearable gadget initiative after it had to do a mass recall of Peak smartwatches, multiple sources in the company confirmed.

The smartwatches were developed by Basis Science, a Silicon Valley startup acquired by Intel in 2014 and integrated into its New Devices Group (NDG).

After failing to take on competition in the smartphone space, the global giant shifted its focus to IoT and wearable devices. Intel made its biggest bet to disrupt the wearable tech space with the acquisition of Basis Science. But in June this year, it it stopped the sale of Peak and recalled the flagship product from Basis, after users reported of blisters and burns due to overheating of the device.

Responding to a Tech in Asia questionnaire, the company said, “Intel is in no way stepping back from the wearables business. In fact, we have several products in the works that we are very excited about, as well as prior launches that highlight our wearable technology such as the TAG Heuer Connected watch and recent Oakley Radar Pace smart eyewear.” The spokesperson did not want to respond to questions regarding Basis, Ruby, and the NDG layoffs “at this time.”

Tag Heuer Connected smartwatch shown off at the Intel booth at CES 2016. Photo credit: Designmilk.

However, several sources in the Basis team and in Intel said the fate of the New Devices Group (NDG), conceived as a unit designed to support the chipmaker’s wearable ambitions, is now under the guillotine. About 80 percent of the team has been informed about an imminent layoff by year-end, according to two Intel staff members, who spoke to Tech in Asia on the condition of anonymity because they are not authorized to talk to the media.

About 80 percent of the team has been informed about an imminent layoff by year-end.

Incidentally, that’s also the time when Intel intends to withdraw the proprietary software for Peak, and stop developing it altogether. Intel informed its users of this change during the recall.

As a result, the development of Basis’s much-awaited new product – Ruby – has also been suspended, sources said. Ruby would have been Basis’s first major product after Peak. It was set to be a smaller watch, designed to take on Fitbit’s Charge 2. A revamped version of the Basis software was expected with it. Originally developed for female users, the Ruby was eventually meant to be positioned more broadly.

Senior executives in Intel told Tech in Asia that the company will step away from the wearables business for the time being, and would rather train its focus on AI and VR-based products.

What went wrong

In June, Intel and Basis advised users to stop wearing the Peak smartwatch and to avoid using the charging cradle, which some owners had suggested was overheating and even melting.

Sources said the problem was an active LED in the back of the Basis Peak smartwatch that continuously monitors the wearer’s heart rate.

Chink in the armor

Does Intel have a chance?