Google is releasing an Android SDK for wearables this month (March, 2015).
So what is their vision for wearables is? The example that Pichai reportedly gave is a “smart jacket” with sensors.
The only wearables that I know of that are currently succeeding in the mass market, are the fitness trackers. The Nike FuelBand’s and the Jawbones. NPD has reported that the market for digital fitness devices was $330 million. Given the price of these devices, it looks like millions have been sold.
So the question is, does the FuelBand run Android? Does it run Linux?
The answer lies in the hardware that enables them to be small enough to comfortably fit on your wrist and last a full day on a single battery charge. It looks like the CPU is an ultra-low power ARM Cortex-M3 with 256 Kbytes flash (hacknikefuelband.com).
Not really enough to run Linux or Android.
Even the Pebble smartwatch which is a bluetooth connected notification center, uses a non-Linux OS (FreeRTOS) according to Wikipedia.
Simply put, the hardware that would comfortably fit on your wrist cannot run Android yet. Pichai is right; you need something jacket-sized.