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TAG Heuer teams up with Intel, Google on smartwatch

The mechanical watch with tech features -- a rarity in an all-digital smartwatch world -- is expected by year's end, with more details on pricing and features slated for the fourth quarter.

Swiss watchmaker TAG Heuer is the latest company to move into the increasingly crowded smartwatch market. Getty Images

TAG Heuer, the 155-year-old Swiss watchmaker, is embarking on a new tradition, with the help of Google and Intel.

TAG announced Thursday a new partnership with the two Silicon Valley giants to create a mechanical watch embedded with new tech features. Intel will supply the processor and Google will provide its Android Wear operating system. TAG made its announcement at the start of Baselworld, an annual conference in Switzerland for watchmakers and jewelers.

The TAG Heuer, Intel and Google partnership could deliver a worthy rival to the the highly anticipated Apple Watch, scheduled to ship April 24 and priced between $349 and $17,000. The TAG watch could also lend credibility to Google's fledgling wearable operating system, which Google unveiled last March, and give the rare mechanical smartwatch a competitive edge against the more prevalent digital-faced design. TAG's watch will be the first Swiss Android Wear smartwatch and Intel's first effort with Android Wear, Intel said.

"This is really the first product of its kind coming from a luxury watchmaker," said Intel spokeswoman Ellen Healy.

Now playing: Watch this: TAG Heuer will make the first luxury Android Wear smartwatch

TAG will provide details on pricing and features around the fourth quarter. The watch should be available by the end of this year. The company is expected to build a digital replica of the original TAG Heuer black Carrera watch, according to Reuters. Certain new models of the Carrera watch can cost roughly $3,000 to $5,000.

Traditional watchmakers such as TAG have been facing competition from a growing list of smartwatch makers, including Samsung, Sony and Pebble. Despite a tepid response from consumers so far, smartwatch shipments are expected to surge this year to 28.1 million units, from 4.6 million units last year, with Apple expected to take 55 percent of the market, according to researcher Strategy Analytics. Developing a more traditionally minded smartwatch might help TAG stay relevant in the digital age while remaining true to some of its watchmaking roots. That could have been tougher to accomplish than it sounds.

In a January interview with Bloomberg, TAG CEO Jean-Claude Biver explained that his company can't produce the chips, hardware or applications for a smartwatch. "Nobody can produce it in Switzerland," he said.

"The hardware and the software will come from Silicon Valley," he continued. "But the watch case, the dial, the design, the idea, the crown, that part of the watch will, of course, be Swiss."

TAG timepieces will include some of the more typical functions of a smartwatch, such as GPS or health monitoring, Biver said in the interview, along with brand-specific applications such as connections to the sports that TAG sponsors.

Intel's deal with TAG closely matches a handful of other partnerships the chip giant has made in the past few months with makers of luxury and fashion-focused clothing and accessories. In September it announced a tie-up with design house Opening Ceremony to create the MICA luxury smart bracelet. The company that month also said it's working with watchmaker Fossil Group to develop "wearable technology for the fashion industry." And in December, Intel said it had a multiyear R&D agreement with Luxottica Group to add smart technology to luxury eyewear. So far, Intel's MICA and Basis smartwatches are among its only wearables to reach the market.

Such partnerships are important for Intel to grab an early stake in the emerging wearables market. It's learned the importance of timing. The world's biggest chipmaker missed the explosive rise of smartphones and has been playing catch up in that space ever since.

"For Intel, it's just another proof-point in our progress," Intel's Healy said of the TAG deal.