Google announced it will by acquiring a popular smartwatch company called Fitbit for a cash deal of $2.1 billion.
What is so special about Fitbit?
Fitbit is a company that develops wearable technology. It originally created low-cost bands that track fitness levels with the distance you walk or run. Over the past few years, it has evolved its product into different models of smartwatches. Fitbit has developed unique designs for its watches (hardware) as well as super fitness tracking abilities like a mobile app, social network, sleep tracking, subscription coaching (software) that has made it stand out in a surplus of fitness wearables.
What is a smartwatch?
A smartwatch is a watch that gives you more than just the time. It can track your fitness levels (steps, heart rate, sleep patterns), reply to messages and receive calls, interact with your smart assistant, help with directions, give you access to your music and much more.
The smartwatch industry is a very profitable industry. Reuters reports that the total revenue from smartwatch sales is expected to be about $11 billion in 2019, and is predicted to increase to $37 billion by 2024. That’s a lot!
Currently, Apple Watch and Samsung’s Galaxy are the market leaders. Apple recorded 46.8% market share in the second quarter of 2019, while Fitbit came in at 9.8%, in terms of the number of watches sold.
What is market share? Market share is how much of the market the one product has captured. For example, if the total market for smartwatches sold in a year is 100 pieces, and 46.8 of those sold that year are Apple Watches, Apple has 46.8% market share that year.
Why would Fitbit be ok with being bought by Google? Fitbit was the clear leader in activity-health tracking wearables for a long time, but it’s market share has declined over the past three years. With this deal, Fitbit will get access to Google’s software and will be able to expand its app store. It will be able to introduce better products in the health wearables category.
Why does Google want to buy Fitbit? Google has an operating system for a watch called the WearOS that is used in other smartwatch brands’ hardware, such as Fossil and Emporio Armani but they don’t have their own branded wearables. Google wants to build their own smartwatch and fitness hardware and Fitbit’s expertise and hardware abilities will help them with this!
In addition, Fitbit has 28 million active users syncing steps, heart-rate, sleep readings, locations and more from their smartwatches. The company has a lot of meaningful data on a person’s private life. This could be the most precious element of this deal. This data can be used for target advertising? Influence your Google search results? To build new health products?
Though Google has clarified that Fitbit health and wellness data will not be used for Google ads and Fitbit has promised its user base that the data will remain private only time will tell.
We can’t wait to see what new products this new partnership will bring.