4 insights on Google’s Fitbit acquisition

On Friday November 1st, Google announced it is going to acquire Fitbit. The acquisition price of 1.9 billion euros makes it one of the major acquisitions of the year. The fact that Google is acquiring a smartwatch brand makes it very interesting for anyone interested in the future of tech. Especially if you are following the health and/or wearable sectors. In this article we give four major insights related to the acquisition.

Google is primarily an artificial intelligence and machine learning company

Fitbit has sold 100 million devices, each collecting a big set of data of each of its customers. With the acquisition of Fitbit, Google also acquires the vast amount of data Fitbit has acquired in the past years. For 1.9 billion euros, Google has bought a massive dataset which it can use to train and improve its AI/ML algorithms. If you have ever worn a Fitbit device, chances are your data will be resting on Google’s servers once the acquisition is completed.

Health is a major focus area for Google

Google has invested heavily in pushing its data processing capabilities into new areas. One of these areas has been healthcare. Verily and Calico are two major subbranches of Alphabet (Google’s mother firm) and they are both focused on health. Google wants to disrupt the health space and sees major opportunities to leverage its data skills to bring cures to common diseases and to battle aging. The acquisition of Fitbit further expands this focus.

On top of that, Fitbit recently announced that their Health Solutions branch will hit the 100 million dollar revenue milestone in 2019. Fitbit’s health solutions are quite probably a great fit into Google’s Health portfolio. 

Google is moving into hardware

The acquisition was announced by Rick Osterloh, Google’s Senior Vice President for Devices and Services (aka Hardware). The fact that the former Motorola Mobility lead announces the acquisition might be a clear sign of the position Fitbit is going to take within Alphabet’s structure.

It is clear that the move is a way for Google to acquire capabilities in the space of smartwatch development on a hardware level. Parallels can be found with Google’s history with smartphones. The move there towards the Google Pixel and in-house hardware development after the Motorola Mobility acquisition is something we definitely can expect for Google’s smartwatch business as well.

Is a generic smartwatch the way to go?

Fitbit has sold 84 million devices in the past five years but has only acquired 21 million active users up to today. That’s quite a churn rate of 75%. Assuming 4 out of 10 devices sold in the past five years being repeat sales, the churn still peaks at 61%. Fitbit is primarily selling devices that end up in drawers after the initial use of the device.

Generic wearable technology is now ubiquitous in the smartwatch market. We all know plenty of people with a generic smartwatch that is able to measure 30+ activities. However, if you really care about one of those activities, generic solutions never sufficiently serve your needs. At Swimtraxx, we believe the next big step in wearable technology is application specificity. This is why we have built the smartest swim specific system ever. And we are launching it on November 12th.

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