Google, scouting out opportunities at the intersection of digital technology and healthcare, is paying $2.1 billion to buy Fitbit, which will permit it to leverage its tech expertise and expand in the rapidly growing wearables market.
The purchase may also help it make up for ground lost when its own Android WearOS smartwatch failed to connect with consumers.
By working with Fitbit’s experts, Google hopes to “spur innovation in wearables and build products to benefit even more people,” Rick Osterloh, Google senior vice president of devices and services, said in a blog post.
Osterloh also promised to protect consumers data, a major concern in the wearables space. “…we will be transparent about the data we collect and why,” he said.
Google’s parent, Alphabet, along with Apple and Amazon have been pushing hard to expand into the $7-plus trillion healthcare market. And wearables — whether for fitness like Fitbit or not — comprise a growing market of their own. Worldwide revenue from wearables devices is increasing from $26 billion in 2018 to an estimated $34 billion this year, with projections for it to go to $73 billion by 2022, according to Statista.
While Fitbit has lost significant market share since pioneering wearable band technology for health-minded consumers, it has remained active in developing technology that may help the company stay competitive. In 2017, Fitbit acquired luxury smart watch maker Vector. That deal followed a year after its purchase of smart watch manufacturer Pebble.
Fitbit’s stature has sunk amid increased competition and missteps that included a recall related to an allergic reaction among users and concerns about devices’ accuracy. In the second quarter according to research group Canalys, Fitbit held 24% of the worldwide wearables market in devices sold, down from nearly 50% at its peak in early 2014. The Information reported that Facebook was interested in purchasing Fitbit but at only half the price of Alphabet’s offer.
In January, Alphabet paid $40 million to design firm Fossil for its smartwatch technology.
- According to Canalys, Apple held a leading 38% of the market share. Fitbit ranked second.
- Fitbit generated $313 million in revenue in its second quarter, a 4.6% gain from a year ago, but the company cut its guidance for the third quarter after notching a $69 million net loss. The company is scheduled to announce its latest earnings Nov. 6.
- Apple generated $5.5 billion in its most recent quarter for its wearables, home and accessories division, although the category includes sales of ear buds and other non-fitness-related products.
- Wearables have been criticized for not engineered properly for minorities and women.