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Google has just definitively agreed to buy Fitbit, hook, line and sinker. The deal itself will probably have all the I’s dotted and T’s crossed in 2020. Many of us knew this was probably happening ‘a while’ ago but, hey, insider trading is illegal and I’m still poor :-(. Although if you look at the share price movements over the last few weeks, you might suspect there were several people who have fewer scruples than me.
Press Release: HERE Although it doesn’t really explain why Fitbit is worth $2.1bn.
I’m more interested in how this will pan out in the wearable market place.
Why has Google bought Fitbit?
Remember first of all that Google is primarily an advertising company and let that thought cloud your opinions as you read on.
- Some fitness wristbands – this is a declining market according to recent (Gartner, Oct 2019). Other than recouping a few dollars I can’t see Google having ANY real interest in these.
- A wannabe Apple Watch with the Fitbit Versa. Versa might be a Wannabe but more realistically is a Neverwillbe. Google has some REALLY clever people working for them and I just can’t see them being hoodwinked into believing they can do much with tech that’s 2-3 years behind the curve. Versa 1 eventually did alright in terms of sales but was a bit of a tech joke when first released. Versa Lite and Versa 2 personified ‘meh’ to me. I strongly suspect that loyal customers upgrading was the main reason why Versa appeared to sometimes sell at ‘alright’ levels.
- A slightly more expensive and definitely more rectangular version (kinda) called the Ionic. Some call it Fugly.
- People – I’d imagine Fitbit has some pretty smart cookies working for them. It’s definitely better to have smart cookies working for you than those that are intellectually challenged. Nice move here Google…if you can retain them.
- Patents – I’d imagine that Fitbit has lots of these. I cycle with a few tech patent lawyers and these can keep a company going without any products almost indefinitely. eg Nokia (kinda)
- Platform – The Fitbit app and online platform have generally seemed pretty good to me. It could provide a great user-layer above Google Fit…or not. However, if Google were THAT desperate for an activity ‘user layer’, I’m sure this was one wheel they could easily have re-invented for VERY SIGNIFICANTLY less than $2.1bn. Google tends to do stuff that has a very minimal consumer footprint in terms of the apps they release…the Fitbit ecosystem is complex when looked at from that perspective. To me, the Fitbit platform doesn’t fit with Google.
- Apps – I’m not so sure about the app infrastructure either, I could make another snidey comment but I don’t really know enough about how good it is behind the scenes. But surely it’s obvious that Google wants Wear OS to succeed not FitOS? Surely?
- Future Tech – There might be some Ionic 2 or Versa 3 that Fitbit just couldn’t get the resources behind in a convincing enough manner to get it out of the door. Fitbit also bought PEBBLE a while back for $23m ish, unless there’s something special still there in either of those places, I can’t see why Google would want this. But I can see why Google would want a means to get medical data – that might be the answer to the question “Why did Google Buy Fitbit?”
- The Fitbit Brand Name – Actually this is probably worth something. The brand name, I think, has a generally positive vibe about it. Perhaps Google could have Fitbit-branded self-driving cars or pens or something…more likely it will be the ‘or something‘ 😉
- Users – The users could have been bought to cross-sell other stuff to?? Straws. Clutching. Nah.
- Data – Google loves data but they already have lots of it (ahem). If they specifically want even more customer sporty/activity data then that would only make sense to me if they planned to keep the products evolving into the future. Hopefully, I’ve made it clear that I am sceptical of that. Plus various regulators (OK, just the EU) really aren’t going to like this. Plus Google specifically says that its “health and wellness” data would not be used for Google adverts (I beleive that).
- Data – HEALTH – Wider health data, on the other hand, is going to be WAY more valuable than your latest 5k time in the future. People are investing in MEDICAL STUFF right now and not SPORTS stuff.
How Might This Impact Fitbit Products
I guess, non-strategically, the smarter Fitbit products (Versa/Ionic) could be ported across to WearOS with a new iteration of the hardware. This might give a little more oomph to Wear OS and its user base. From a short-term, tactical perspective there is some sense in that.
The question then becomes “And now what?”
How will this affect Fitbit Users
I would have thought it highly likely that the Fitbit platform is supported in some form for many years. Whether or not the platform develops is down to why Google bought the company and if there really is a future for Fitbit-branded smart/activity devices.
How will this impact the competition?
I’d imagine that they all can’t believe their luck with the timing just before Black Friday and just before Christmas. Christmas REALLY has come early for them. Uncertainty will massively harm new users thining of buying Fitbit devices. Even Fitbit’s MANY EXISTING AND GENERALLY LOYAL users will surely think twice about further investing into the Fitbit platform? I would if I were one of them. Many will probably look at their smartphone and then buy a device with a matching brand! or an Apple Watch
If I were Garmin I’d be doing this next week: “Garmin: Get $150 off your new Garmin Vivoactive/Versa when you trade in your redundant Fitbit”
Let’s say, instead, Google had bought a fitness ring company for $100m – or whatever it’s worth. That would make WAY more sense to me. It’s a nice simple product with unique tech and with scope for making it even techier (eg NFC payments or as an identity authenticator) and to fit many more consumer niches with squillions of different styles. The app generates some sweet data and is fairly straightforward. Very many people wear rings and Apple haven’t done one yet.
Back to Fitbit
Dear, oh dear, oh dear.