Google last week announced a deal to acquire wearable fitness device maker Fitbit for US$2.1 billion. The acquisition will give Google, whose parent company is Alphabet, an immediate leading position in the wearables market. Google will be poised to compete against the likes of Apple and Samsung rather than having to build up market share from scratch.
Fitbit, founded in 2007, is one of the pioneers in the activity tracker space. According to a report IDC published last year, it was the third-largest wearable company, based on shipments, trailing Xiaomi and Apple.
Fitbit’s products are carried in approximately 39,000 retail stores in more than 100 countries around the world.
“More than 12 years ago, we set an audacious company vision — to make everyone in the world healthier,” said Fitbit CEO James Park.
“We have built a trusted brand that supports more than 28 million active users around the globe who rely on our products to live a healthier, more active life,” he added. “Google is an ideal partner to advance our mission. With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and make health even more accessible to everyone. I could not be more excited for what lies ahead.”
The transaction is expected to close in 2020. It is subject to customary closing conditions, which will include the approval of Fitbit’s stockholders as well as regulatory approvals.
Google already has its own branded Pixel Watch, but Fitbit could provide it with greater market share — and more importantly, loyal customers. Other tech firms, notably Microsoft, have learned it is easy enough to launch a product in an established market. However, getting customers to switch to a new platform is extremely challenging.
With 28 million users, Google will be an established player — but will it continue to advance Fitbit’s core mission for those users?
“Before the acquisition, Fitbit was clear they weren’t interested in selling to anyone not able to continue their mission of assisting consumers in living a healthy lifestyle,” said Julie Sylvester, producer of the upcoming CES 2020 Sports & Fitness Tech and Wearable Tech Summit.
“With the acquisition of Fitbit, Google is adopting technology that will expand their expertise in the smart watch area and add functionality to their ever-expanding wearables market,” she told TechNewsWorld.
“The advantage is they are going to be able to combine the Google knowledge with the Fitbit simplicity of design,” Sylvester added.
This is not the first time Google has made an acquisition to establish its presence in an existing category.
“As Nest users discovered, Google has a ‘move fast and break things’ approach to consumer electronics products,” said Steve Blum, principal analyst at Tellus Venture Associates.
“Its continued support of any particular piece of Fitbit hardware will depend on how well it ‘fits’ into Google’s overall business model,” he told TechNewsWorld.
Business as Usual
For most Fitbit users, it likely will be business as usual, even if the products fall under the greater Google brand. If anything, Fitbit products could be more innovative, thanks to Google’s deep pockets.
“The primary effect on Fitbit users will be unseen,” said Roger L. Kay, principal analyst at Endpoint Technologies Associates.
“Google is a smart company, and they’ll likely do some innovating that makes it into the Fitbit products over time,” he told TechNewsWorld. “Perhaps AI will be one of those.”
Most importantly, Google will likely want to keep the Fitbit brand because it already has a solid market presence and is second only to the Apple Watch in the wearables category explained Kay.
The look of Fitbit could change under the new ownership — at least to create something resembling synergy with Google.
“Device form factors will merge with more Google software in and around Fitbit’s, and better health and exercise data for Pixel Watch,” said Roger Entner, principal analyst at Recon Analytics.
Consumer trust is among its most paramount tenets, Fitbit has said, with strong privacy and security guidelines built into its DNA. The acquisition will not change that, according to the company, which promised that Fitbit health and wellness data will not be used for Google ads.
Google may have other plans in mind, of course, especially over the long haul.
“Google will integrate Fitbit into its data collection and analysis universe,” Entner told TechNewsWorld.
“The devices will become more interoperable with Android,” he predicted, adding that the trackers probably will become more powerful in terms of data collection and analysis.
Users’ data “will be aggregated with everything else Google has on them and monetized however possible,” said Kay. “The front end should look about the same, and the larger question of whether people should worry about what Google knows about them is a bit of a door-slam after the horse has already bolted.”
Google — or more importantly Alphabet — may have branched out into a plethora of businesses, including the development of autonomous vehicles, but its core business is still based on selling online ads.
“Which is about collecting, cross referencing and publishing data,” said Tellus Venture Associates’ Blum.
“Fitbit collects a tremendous amount of data from its users, and Google will want to mash it all up with geo-referencing, email, search history and every other kind of data it has,” he added.
“Most users probably won’t care, and probably will see benefit from the kind of cross-referencing Google can do — with health data, for example,” Blum noted. “Some users won’t like that at all. If Google is transparent about what it’s doing, and follows the kind of procedures that the new California Consumer Privacy Act mandates, there shouldn’t be a problem. That’s a big if, though.”
The issue really isn’t about the collection of data, as Fitbit already has accumulated a big stash of data from its users. The change is that Google soon could have access to it.
“Most people paid no attention over the past 15 year or so as Google created a composite digital twin of everyone, certainly in the United States and many other places as well,” said Kay.
Still, if this is the case, it could result in some customers leaving the Fitbit ecosystem.
“The people who don’t care where their data goes will not mind Google, and those who do are — or will be — with Apple,” added Recon Analytics’ Entner.
For some the fact that any company may have access to such highly personal information may remain a deal breaker in the wearables category.
“I already drew the line personally at smart assistants,” said Endpoint Technologies Associates’ Kay.
“I don’t want live microphones in my house with unknown lurkers on the other end, and fitness tracking is even more intrusive and I’m definitely not down for that,” he said bluntly. “Obviously others disagree, and the health side of personal trackers can be genuinely useful. It’s quite possible that in the future I’ll be forced to wear one because my doctor or insurance company insists.”