Intel Recalls Basis Peak Smartwatches Due to Overheating
August 03 2016 - 8:37PM
Dow Jones News
By Don Clark and Georgia Wells
Intel Corp. said it is recalling all Basis Peak smartwatches
because of overheating issues, a setback for the chip maker's
high-profile embrace of wearable technology.
The Silicon Valley giant asked customers to return the
fitness-tracking devices for a refund of the unit price, sales tax
and shipping cost.
The watches were created by Intel's Basis Sciences unit and sold
between November 2014 and June 2016, when Intel discovered the
overheating problem. The company recommended that customers stop
using the product until it delivered a software update. The company
on Wednesday said its effort to update the software had not fixed
the problem.
Intel in June said that a small number of Basis Peak customers
had reported that their watches overheated, in some cases causing
discomfort, blistering or burns. The reported problems at that time
involved approximately 0.2% of the watches sold, it said.
A company spokesman said he couldn't estimate how many Basis
Science devices had been sold, or whether a replacement product
will be developed.
Intel acquired the product line through the March 2014 purchase
of San Francisco startup Basis Science Inc. Intel didn't disclose
financial terms of the acquisition, but a person familiar with the
matter said that Intel paid more than $100 million.
Basis found only a small niche market. Its sales never exceeded
1% of all smartwatches, according to Daniel Matte, an analyst with
research firm Canalys who covers wearables.
However, the market as a whole hasn't met optimistic
expectations. Fitbit Inc., the leader in fitness trackers, on
Tuesday reported it had sold 5.7 million devices in its most recent
quarter, helping to ease "concerns that fitness trackers could be a
fad," wrote SunTrust Robinson Humphrey analyst Robert Peck in a
research note.
Intel, based in Santa Clara, Calif., is best known for selling
microprocessor chips for personal computers. Its sales have
suffered as demand for those devices have fallen and the company
failed to place its chips in many smartphones.
Brian Krzanich, who became Intel's chief executive in May 2013,
tried to establish a strong position in wearable computing by
jumping into the market early. The Basis purchase was described by
the company at the time mainly as a way of acquiring intellectual
property and expertise in the field, rather than an attempt to
build a major consumer products business.
Intel subsequently developed chips targeting smartwatches and
wearable devices, though most such products use chip technology
licensed from rival ARM Holdings PLC. It also purchased other
startups in the field such as Recon Instruments, which develops
high-tech eyewear for sport enthusiasts.
The company said Wednesday it was unable to develop a software
update to fix the overheating problem "without completely
compromising the user experience." So it opted for the recall.
"This was a tough decision, but your safety is our top
priority," said Josh Walden, senior vice president and general
manager of Intel's new technology group, in a statement posted on
the Basis website.
Intel said most of the watches were priced at $139 to $199,
while a Titanium version sold for $299. It said customers will
receive slightly more for the refunds, which will include sales tax
plus shipping costs.
(END) Dow Jones Newswires
August 03, 2016 20:22 ET (00:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Intel (NASDAQ:INTC)
Historical Stock Chart
From Apr 2024 to May 2024
Intel (NASDAQ:INTC)
Historical Stock Chart
From May 2023 to May 2024