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Making sense of the Alphabet-Fitbit acquisition
Early Monday morning, a Reuters report outed Alphabet’s potential plans to acquire Fitbit. Supposedly Google’s parent has already put in a bid for the US-based fitness company, though the report has not been confirmed as of this writing.
If the news turns out to be true — and it very well might — what can we expect from the two companies going forward? And who will benefit the most out of the acquisition: Google, Fitbit, or the users? I think all three will, but as history has taught us, Google acquiring a company doesn’t automatically mean something positive for all parties involved.
Google’s hardware push needs to include wearables
In recent years, Google has pushed to become a serious player in hardware. It all started in 2017 when Google acquired a large portion of HTC’s R&D team to work on Pixel hardware. Since then, we’ve seen fantastic Google-made hardware products, including Pixel phones, laptops, earbuds, speakers, and more.
The major product category not listed here? Wearables. Google makes Wear OS, a smartwatch platform in dire need of a refresh and a shot in the arm from its creator. Despite multiple rumors of an elusive Pixel smartwatch, Google has never followed through with its own first-party wearable hardware. That, coupled with some disconcerting comments about Wear OS from the company at I/O 2019, does not leave much hope that Google is very serious about wearables.
Things might be headed in the right direction, though. In January 2019, Google bought $40 million worth of smartwatch-related IP from Fossil, the watch brand that’s recently brought the majority of Wear OS watches to market. Details of the Fossil IP sale have yet to be confirmed, but Wareable reported in September that it includes “hybrid smartwatch technology” and features various designs “combining physical watch features with digital elements — some with screens, some without.” This all sounds very vague right now, and there’s no telling to what capacity Google will use Fossil’s apparent hybrid smartwatch tech. But one thing is certain: Google appears to be getting more serious about wearables.
Fitbit’s brand recognition is worth more than you think
This isn’t to say Google hasn’t tried to make it in the fitness world. Google Fit, the company’s fitness platform, has been around for years. It received a major revamp in 2018 and became much more streamlined across Android and iOS. However, the platform is still missing major features present in other fitness applications, which is particularly unfortunate seeing as Google Fit is the main fitness tracking app behind Google’s own Wear OS watches. It’s the reason I won’t often recommend Wear OS devices for fitness, at least compared to the competition. Despite Google’s best efforts so far, Google Fit still falls well behind other fitness companies’ apps and services.
I don’t fault Google — the fitness market is a crowded one, and the companies at the top have been there for years. Fitbit, Garmin, Apple, Polar, and others are all vying for your fitness dollars. Aside from Apple, these are companies that are 100% dedicated to making the best and most accurate fitness products available. If you were Google, wouldn’t it be daunting to throw money at a market where others are already so far ahead?
So, what’s a multi-billion dollar company to do if it can’t get the fitness formula right? Buy the company at the top, of course.
The easiest way to make it in the fitness market is to acquire a company that’s already proven itself. Fitbit essentially helped pioneer the fitness trackers we see on everyone’s wrists today. It continues to partner with other health companies to help diagnose serious issues like atrial fibrillation (AFib). It’s also the only fitness company I can think of that has the Kleenex effect, in that people often refer to their fitness bands as “a Fitbit,” no matter what brand they’re using. Fitbit has strong brand recognition, and that’s what Google needs.
A match made in heaven?
Physical products aren’t the only benefit for Google buying Fitbit, but they’re an important part of it. Fitbit has a wide array of fitness products for all types of athletes. The Versa 2 is a fine smartwatch, if not a little quirky, and its price point is stellar for what you get. The older Ionic is a good GPS running watch, and there’s also the Fitbit Charge 3 and Inspire line that are fantastic fitness bands for those who don’t need a big smartwatch.
Fitbit’s products are meant to be attractive to users who are more interested in products that “just work,” as opposed to getting the best of the best. Fitbits are for everyone. They work, and they work well (for the most part).
I’ve often said the most underrated part of buying a fitness product is the app and software features that come along with it. Sure, you can buy a Xiaomi Mi Band 4 and save a bunch of money, but you’re going to miss out on premium features like in-app social networking and training plans that are offered by Fitbit and a handful of other fitness companies.
The Fitbit app offers one of the most comprehensive user experiences casual users and athletes can get their hands on. It’s well designed, easy to use, and receives regular updates. There’s also an entire social network built into the Fitbit app that lets users post updates, talk with other Fitbit users, join challenges, ask for advice in the Fitbit community, and more.
Out of all of Google’s ventures, what’s the one area the company can’t get a footing? Social networking. You see where I’m going here? Fitbit has what Google needs: A far-reaching product portfolio with a robust app and a solid social networking foundation.
We also can’t forget the other thing Google is constantly trying to acquire: your data. Fitbit has years upon years of fitness and health data from all its users, which will all be Google’s if the acquisition goes through. Fitbit knows how many steps its users take on a daily basis, what food data users are logging in the Fitbit app, and more. That’s all juicy stuff from Google’s point of view.
This is mostly good news, but don’t get too excited
Let’s talk realistically. This acquisition rumor is just that — a rumor. Thus, we can’t bank on this becoming a reality just yet. If it does, though, it’ll likely benefit everyone involved, including Fitbit. Hopefully.
- Fitbit cut its 2019 revenue forecast in July, blaming disappointing Versa Lite sales.
- When the Reuters report detailed Google’s interest, Fitbit stock rose 30%. However, this is still well below the company’s IPO price from 2015. The glory days seem to be over for Fitbit.
- It’s not in the best place financially, so joining a company that bleeds money can only be a good thing. Fitbit needs backing from someone in order to stay afloat.
- Fitbit is apparently willing to sell.
As excited as I am about the potential Alphabet-Fitbit buyout, I have to remain wary about Google’s inability to keep products afloat after more than a few years. Its history of failed products is a long one, and it even pokes fun at itself from time to time.
We also can’t forget about Motorola. Google buying Motorola was a good thing for a long time, until it wasn’t. Motorola is now the shell of what was once the smartphone industry’s darling brand after Google stripped it of its IP and sold it to Lenovo.
I’m really hoping Alphabet doesn’t do the same thing with Fitbit, but let’s be honest: We can’t be certain.
Fitbit is primed and ready to be acquired, and its product portfolio seems to fit squarely into Google’s needs. It’s almost like a match made in heaven. Let’s just hope the Fitbit many people rely on isn’t squandered by Google’s “buy everything and hope it all works out” approach.