After a month of rumors, this morning Google and Fitbit announced that the former has officially purchased the wearable giant for roughly $2.1 billion, or $7.35 per share, in cash.
Fitbit stressed that its devices will remain platform-agnostic across the Android and iOS ecosystems. Still, a blog post from Google discussing the acquisition made it clear that we can also expect to see some Google wearables in the future.
“Over the years, Google has made progress with partners in this space with Wear OS and Google Fit, but we see an opportunity to invest even more in Wear OS as well as introduce Made by Google wearable devices into the market,” Rick Osterloh, SVP of devices and services, wrote in the Google blog post. “Fitbit has been a true pioneer in the industry and has created engaging products, experiences and a vibrant community of users.”
With more than 100 millions devices sold, Fitbit has a lot of wellness and behavioral data. What happens to that data in terms of implementation and privacy has been a big question amidst recent discussions of the rumors, which Osterloh addressed in the blog post.
“When you use our products, you’re trusting Google with your information,” Osterloh said. “We understand this is a big responsibility and we work hard to protect your information, put you in control and give you transparency about your data. Similar to our other products, with wearables, we will be transparent about the data we collect and why. We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads. And we will give Fitbit users the choice to review, move or delete their data."
The acquisition is set to go through in 2020, assuming regulatory and stockholder approvals.
WHY IT MATTERS
This acquisition is set to unite the second biggest wearable maker and one of the biggest tech giants in the world, and brings a swath of benefits to both companies (many of which the MobiHealthNews staff covered at length in a recent podcast discussion of the rumors).
For Google, it's a consumer device strategy that somewhat mirrors its approach to smartphones — develop an OS for partner hardware makers, and eventually develop an in-house offering built on that infrastructure (à la the Pixel product line). This time, however, the company will have an extra leg up, as Fitbit is an extremely experienced partner and a strong choice to lead Google's dive into this market.
With that being said, it will be interesting to see what ramifications Google's in-house wearable hardware will have for the company's Wear OS partners, or how Fitbit's brand might be combined with the Fossil smartwatch tech Google purchased earlier this year for $40 million.
Also worth noting on the Google side is its sister life sciences company Verily. While that group's own health tracking wearable, the Verily Study Watch, swings a bit harder toward medical-grade monitoring than Fitbit's products, it's hard to think that some of its other projects might not benefit from incorporating Fitbit's health trackers. Onduo, its diabetes management program jointly run with Sanofi, already employs devices and sensors to manage patients and drive healthy behaviors, for example.
Fitbit, meanwhile, has found an exit in a time where its business has been performing a bit underneath expectations. But in particular, it will be interesting to see how Google decides to leverage some of the wearable maker's more recent initiatives — namely, the enterprise-facing Fitbit Health Solutions (built on the back of its Twine Health acquisition in early 2018) and a much more recent push into data-driven health coaching.
It isn't hard to see where Google's artificial intelligence (AI) and machine learning (ML) expertise could augment both of these efforts with powerful insight generation, Google device ecosystem integrations and, of course, some very deep pockets.
THE LARGER TREND
The years following Fitbit's 2015 IPO have been a bit rocky. While the inital listing price of $20 rose to the mid-$40 range shortly after the IPO, in the years since it had dropped to the $4.00 to $5.00 range. Share prices had bumped up a hair amidst the acquisition rumors before eventually settling on the $7.35 purchase price. All throughout, the company has been making a gradual shift in its wearables strategy away from health trackers and toward do-it-all smartwatches.
But Fitbit has also had a good number of wins. The first Versa in particular outshone the company’s initial expectations, and its most recent numbers saw steady growth for the Fitbit Health Solutions business unit.
On the other hand, Apple’s more comprehensive and increasingly healthcare-focused smartwatches continue to hold the top spot among consumers. With others such as Garmin and Samsung continuing to vie for their own slice of the hardware market, only time will tell where the consolidation of Fitbit's and Google's strengths leave the wearables market.
ON THE RECORD
“More than 12 years ago, we set an audacious company vision — to make everyone in the world healthier. Today, I’m incredibly proud of what we’ve achieved towards reaching that goal. 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,” James Park, co-founder and CEO of Fitbit, said in a statement. “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.”