UNITED STATES – World’s biggest web search company and Alphabet Inc-owned Google has revealed that it will buyFitbit Inc for $2.1 billion, as the looks to take on Apple and Samsung in the crowded market for fitness trackers and smart watches.
Google said in November that it sees an opportunity to introduce its own wearable devices and invest more in digital health.
“Fitbit has been a true pioneer in the industry and has created engaging products, experiences and a vibrant community of users,” Google device SVP Rick Osterloh wrote in his blog post announcing the deal.
Osterloh noted that, “By working closely with Fitbit’s team of experts, and bringing together the best AI, software and hardware, we can help spur innovation in wearables and build products to benefit even more people around the world.”
The purchase will therefore bring on board a rich trove of health data gathered by millions of Fitbit’s devices which would then be incorporated into the new devices to make them more competitive.
Fitbit’s fitness trackers and other devices monitor users’ daily steps, calories burned, and distance traveled. They also measure floors climbed, sleep duration and quality, and heart rate.
Fitbit’s share of the wearables market has however been threatened by deeper-pocketed companies such as Apple Inc and Samsung Electronics Co Ltd as well as cheaper offerings from China’s Huawei Technologies Co Ltd and Xiaomi Corp.
The purchase is therefore considered to be mutually beneficial for both companies as it will help google gain a foothold in the young but overcrowded wearables market while Fitbit whose stock had fallen to a low of US$2.81 from a high of US$51.80 recorded in summer 2015.
“We believe Google is a natural fit. The deep health and fitness data, coupled with the 28 million active users on the Fitbit platform, offer a tremendous value,” Craig Hallum analysts wrote in a note.
Google has struggled to make much of a dent in the wearable’s category. In January of this year, the Android giant purchased a large chunk of IP from watchmaker Fossil for $40m — a move that in retrospect looks like a setting of the stage for what was to come today.
Xiaomi dominates the global wearables market, with a 17.3% market share in the second quarter of 2019, followed by Apple while Fitbit owns 10% of the market, according to data from market research firm International Data Corp.