This is far from the first time we have heard chatter about a Google smartwatch. In fact, it wasn't all that long ago when Google boosted the chatter by purchasing WIMM Labs. Google has yet to say anything official, however it looks like "people familiar with the matter" aren't feeling the same need to stay quiet.
To that point, a recent Wall Street Journal report mentions the Google smartwatch is "in late-stage development." Further chatter here brings talk about how Google in currently in talks with Asian suppliers to get underway with mass production. This next bit isn't all that surprising, but it was said the watch will be running Android and integrated with Google Now.
Perhaps more important though, it looks like Google is striving to have a watch with a good battery life. The definition of good will likely vary from person-to-person, however these same people familiar with the matter have said Google is "working to reduce power consumption on the smartwatch so it won't require frequent battery charges."
These sources did not pin anything solid in terms of when the watch can be expected, but there was enough said where we are not going to expect it to arrive at the same time as the Nexus 5 and Kit Kat. As of now the timeline that has been given talks about the watch being ready for mass production "within months."