Google's Newest Venture: Smart Contact Lenses

| About: Alphabet Inc. (GOOG)

Over the past several years, Google (NASDAQ:GOOG) has branched out from its core search engine business to robots, high speed broadband internet, cars, glasses, phones, smart thermostats and now smart contact lenses. Google is developing smart contact lenses that will measure diabetics' blood glucose levels through tears in the eye. While not yet in commercial production, the lenses are outfitted with tiny wireless chips and glucose sensors, sandwiched between two contact lenses. The sensors can take readings once per second and data can be sent to a display that the patient can monitor. Google is also working on putting LED lights inside the lenses that would flash when sugar levels get too high or too low. The sensors in the contacts are so small that Google says they appear to be specks of glitter.

(Source: Google)


According to the CDC, nearly 26 million Americans suffer from diabetes and 7 million are undiagnosed. Worldwide it is estimated the as many as 1 in 19 people have diabetes. The International Diabetes Foundation estimates China and India have 98.4 and 65.1 million diabetics, respectively. When hundreds of millions of people worldwide have a specific problem or disease, companies like Google will seek to innovate in order to profit.

The American Diabetes Association estimates $176 billion was spent in 2012 on direct medical costs to treat diabetes. Of that, approximately $21 billion was spent on diabetic supplies, such as glucose monitors and test strips.

(Source: American Diabetes Association)

Google believes if it can get initial costs under control for their smart contact lenses, they can make significant headway into this market. After all, people with diabetes must prick their fingers and test drops of blood multiple times throughout the day to manage the disease. This can be bothersome, but people rely on this slow and painful method every single day.

Google's Strategy

Like many of Google's recent moves, it isn't clear as to what Google hopes to achieve by designing smart contacts. Does Google hope to continue to expand their massive data collection business or does the company actually plan design, produce and market smart contacts? The Google official blog says,

"We're not going to do this alone: we plan to look for partners who are experts in bringing products like this to market. These partners will use our technology for a smart contact lens and develop apps that would make the measurements available to the wearer and their doctor. We've always said that we'd seek out projects that seem a bit speculative or strange, and at a time when the International Diabetes Federation is declaring that the world is "losing the battle" against diabetes, we thought this project was worth a shot."

Google has already completed several clinical research studies that have helped to refine the prototype. Now Google is in talks with the FDA about possible approval, but recognizes there is plenty of work to be done to bring smart contacts to market. The biggest hurdle for Google is bringing costs down to where health care companies would find it beneficial to pay for such items.

It appears Google plans to finish development of the smart contact and sell the patent or license the product to a company such as Johnson & Johnson (NYSE:JNJ), who is already a major player in the contact lens business. By doing this, Google will be able to do what they do best, gather data. If Google can successfully build a contact that can monitor a person's health, then it's a whole new set of information that Google stands to benefit from. Building out apps that communicate with a smart contact lens will allow people to track and monitor their health. Since health records are involved, Google would likely be able to access only those records that users disclose. Still, Google could use that data and produce targeted ads which could be a potential gold mine in the massive health care industry.


Google is one of the few companies in the world that can take on projects like this and not worry about any short-term financial results. It has the cash on hand to easily support shot in the dark projects like this and hope for long-term success. By entering the smart contact lens business, Google is initially entering the $21 billion a year diabetic supply business but will likely transform the business into health data collection. Google employs some of the smartest people in the world, so it's generally never a good idea to bet against them. This seems to border on science fiction, but Google is strategically placing themselves to benefit from technological advancements that can harvest vast quantities of health data. A smart contact lens has almost endless possibilities on what kind of health data it can collect. The two biggest questions Google must solve is whether users would allow a company such as Google to monitor their health data and whether they can make a smart contact lens that is cost effective for mass production. Using it as a monitoring system for diabetics is brilliant way to roll out such a product. The need for constant information on blood glucose levels is essential for diabetics and a smart contact lens may be the future of diabetic monitoring.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.