NEW YORK (TheStreet) -- You might not know Google (GOOG - Get Report) (GOOGL - Get Report) the company synonymous with search, has been quietly leading the way to develop a device that could change the way 29 million Americans manage their diabetes.

Google's Life Sciences division, which will now be its own separate company under the Alphabet umbrella, is using its dominance in making miniaturized electronics and abundant financial resources to develop a wearable blood glucose monitor that could revolutionize diabetic care and treatment.

Partnering with medical device maker DexCom (DXCM - Get Report) , Google is working on a small, band-aid sized blood glucose monitor that can measure and load blood sugar levels to the wearer's smartphone. Different from the traditional blood glucose monitor which requires administering a drop of blood onto a test strip, the continuous glucose monitor (CGM) monitors blood sugar levels through the skin without a blood sample, or skin prick.

DexCom, which develops and markets several traditional blood glucose monitors, already launched a connective platform that allows users to load their results to an Apple (AAPL - Get Report) iPhone app.

"This is probably one of the most intriguing things in the world right now," says Dave Kliff, founder and author of Diabetic Investor, a newsletter focusing on the diabetes care industry. "It really does capsulize how this entire industry is changing."

The project with Google takes that technology several steps ahead by not only tracking results, but graphing them, analyzing them, and providing invaluable information as to when blood sugar levels spike and fall, allowing for more efficient diabetes management.

The Centers for Disease Control says that diabetes is one of the top ten most prevalent chronic diseases in the U.S. According to a 2012 study by the World Health Organization, the worldwide cost of diabetes swelled to $245 billion, with $176 billion attributed to the direct cost of treatment and management.

The cost alone for diabetic patient monitoring systems is expected to reach $12 billion by 2017.

"These are massive markets that [Google and DexCom] are going after," said Raj Denhoy, equity analyst for Jefferies & Co. "It's intriguing when you look at the numbers in this arrangement, numbers in the $750 million to $5 billion for ultimate product sales. And because these products can become so ubiquitous, it can be used by not just Type 1 diabetics, but Type 2 as well."

So while the payoff for an innovative product can be enormous - Roche, the current market leader in diabetic care makes $1 billion in profits from its diabetes division alone - the costs can be equally stratospheric.

With annual revenue of more than $60 billion, Google seems up to the task and is willing to commit substantial funds to develop innovative products, surpassing even that of industry leader Medtronic (MDT - Get Report) .

"We spend $1.5 billion a year on R&D...and it's mostly D. Google is spending $8 billion a year on R&D, and it's mostly R," said Stephen Oesterle, Medtronic's Senior Vice President of Medicine and Technology at a recent industry conference.

"A lot of the pieces [for the CGM] are already in place, it's just a matter of making the product smaller and less intrusive," Denhoy said. "This is where Google comes in, to really work on the technology side of it and the connectivity side of it so it becomes smaller and that much easier to use."

Besides the CGM, Google has also teamed with pharmaceutical giant Novartis (NVS - Get Report) , to develop "smart lens" technology for ocular medical uses. Google was recently awarded a patent for a contact lens with an embedded chip that can monitor glucose levels in tears, allowing for a less invasive way to check sugar levels in the body.

But it's the CGM that stands the best chance of making it to the market, though maybe not for another two to three years.

Aside from being cheaper, more convenient and disposable, the device can provide up to 288 glucose readings per day, far more substantial than the 6-8 glucose tests diabetics currently make each day, making diabetic management an almost effortless endeavor. This fits in very nicely with Google X's tautology mission statement to "get technology to its higher purpose, which is to get technology out of the way."

Google and DexCom are hoping that the CGM will become the new standard of care for diabetics, and lead to innovations that will change medical care from being reactive to proactive.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.