When using different types of cooperative strategies, firms commit to sharing some of their
unique resources in order to reach an objective that is important to all participants. A key rea-
son cooperative strategies are used is that individual firms sometimes identify opportunities
they can’t pursue because they lack the type and/or quantity of resources needed to do so.
Some partnerships are formed between similar firms who desire to develop scale econ-
omies to enhance their competitiveness. For years, automobile manufacturers have formed
large numbers of partnerships for this reason. In other instances, firms competing in different
industries uniquely combine their unique resources to pursue what they believe is a value-
creating shared objective. This reason describes the rationale driving the partnership Google,
Intel and TAG Heuer have formed to design and produce a smartwatch. A number of observers
of the partnership among these three firms viewed it positively given their conclusion that TAG
Heuer lacked the technology skills to build a competitive smartwatch while the Silicon Valley
firms lacked the design
skills to do so successfully.
In part, the decision
Google, Intel and TAG
Heuer made to collabo-
rate is a strategic action
taken in response to
Apple’s introduction of
the iWatch. A common
opinion among those
leading Swiss watch
manufacturing com-
panies is that the worst
decision that could be
made would be for the
companies to fail to
respond to the iWatch.
Google, Intel and TAG
Heuer believe they are
uniquely qualified to
respond to the iWatch
given the technology used to produce it and in light of Apple’s decision to offer “upscale”
luxury versions of the product, priced initially between $10,000 and $17,000. Recognizing the
threat of smartwatches, other Swiss watchmakers, in addition to TAG Heuer, are taking action.
“Swatch, Breitling, Montblanc, and Frederique Constant are among those that have entered the
fray, with products ranging from a messaging device that clips to a watch strap to a gold-
plated watch containing a fitness tracker.” Supporting the decision among all of these firms to
be involved with smartwatches is the size of the market for this product. In 2014, 4.6 million
smartwatches were sold globally. Analysts thought the market for this product might jump to
as many as 30 million units in 2015. In contrast, the number of Swiss watches sold in 2015 was
expected to decline by 6.3 percent from the number sold a year earlier.
TAG Heuer CEO Jean-Claude Biver describes the nature of the alliance his firm has formed
with Google and Intel as follows: “Swiss watchmaking and Silicon Valley is a marriage of
technological innovation with watchmaking credibility. Our collaboration provides a rich
host of synergies, forming a win-win partnership, and the potential for our three companies
is enormous.” In essence then, he believes that Google and Intel bring unique technological
innovation to the partnership while his firm brings its reputation and skills as a successful
manufacturer of luxury Swiss watches. Part of the reason TAG Heuer’s watches are thought of
as a luxury good is that the firm is a unit of French luxury giant LVMH Moet Hennessy Louis
Vuitton SA. Influencing the formation of this alliance is Google’s desire to demonstrate that its
software can effectively power wearables, Intel’s desire to show how its chips can be used in
wearables, and TAG Heuer’s desire to design and produce more technologically sophisticated
GOOGLE, INTEL, AND TAG HEUER: COLLABORATING
TO PRODUCE A SMARTWATCHFABRICE COFFRINI/AFP/Getty Images