Why did Google buy Fitbit? Three key benefits

On Friday Google announced it will buy Fitbit for around $2 billion.

In recent years smart phones and watches came to duplicate and exceed the main functions of Fitbit’s core products. The company went from being a health tech Unicorn, to Popcorn….a firm with a valuation that pops in to less than meets the eye. At its peak five years ago, Fitbit traded around $50 dollars a share. This Summer I noticed it trading below $2, and I wondered if this huge decline might be overlooking the value it could bring to a larger suitor.

So, what will Google get from the Fitbit acquisition? In short: 1.) their first mass wearable product, 2.) an in-place wellness product line with global adoption and distribution, 3.) reams of progressively sophisticated health data and a privacy debate.

1. Fitbit will be Google’s first mass wearable
Though Google’s device-related revenue is growing, most of its income still is tied to advertising. Google’s progress in devices in evident in my own life: I’ve moved from the Apple iPhone to Google’s Pixel Phone, use Google pods, their smart speaker and home devices from Nest.

While android supports smart watches, Google doesn’t have a wearable product to compete with Samsung or Apple for this consumer touchpoint which will be vital in ambient computing. Imagine if your watch mixed could authenticate your identity and be used to trigger events as you move through a fog of computer connections. Sure, phones can do some of that, but they run out of power faster and can’t observe physical signatures wearables can.

2. Fitbit will give Google a global product line and a re-entry to consumer health
Fitbit’s distribution network of 39,000 stores in 86 countries is a platform Google can use to sell tech-based consumer health devices and services. Fitbit’s base of 90 million devices with 27 million active users is a handhold in the lucrative consumer health market in which Google is otherwise absent from except as an advertising medium.

This purchase starts to reverse Google’s closing of Google Health back in 2012. Apple and Amazon have active consumer health offerings such as Pill Pack, iWatch and Health Kit. Google has recruited healthcare executives Drs. Robert Califf and David Feinberg. It will be telling to see who the Fitbit unit will report to, as they will likely lead consumer health for Google. Someone at Google is “getting a Fitbit (unit) for the holidays”.

3.Fitbit provides unparalleled health data

Who loves data more than Google? The first Fitbit tracker launched at the end of 2009, so there’s a decade of increasingly sophisticated health data that comes with Fitbit.

Knowing steps taken, heart rate, and sleep pattern against factors such as age, location, and demographics are interesting, but Fitbit’s memory goes beyond that. Their female health tracking provides information on menstrual cycles, the platform has user-entered data on diet, fluid consumption, and information from connected devices breaking down muscle and fat composition. Imagine these data matched-up to individual buying histories, analysis of email communications, what people have written on g-mail or the contents of electronic health records.

The data aspect of this acquisition will rightly receive the most scrutiny by health and privacy advocates. After all, Fitbit’s customers never gave specific permission to share their data with Google. While Google may offer reassurance that it will make the data anonymous – Google’s own vast knowledge of consumers from location, to travel, to buying behavior may give them the unintended ability to reidentify who these records track.

Buying Fitbit creates a catalyst inside Google to prioritize healthcare. But keep in mind this is just an opening note. Google has around $120 billion in financial reserves – allowing them to add many movements to a score in which Fitbit is likely just an opening. Fitbit’s greatest contribution may be in encouraging other acquisitions and build on the momentum that it creates.


13 Responses to "Why did Google buy Fitbit? Three key benefits"

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    November 18, 2019

    Probably the most important key is being their first wearable product and they can easily improve it.

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