Google Pays $2.1 Billion to Get Fit(bit)

Google final week introduced a deal to amass wearablefitness machine maker Fitbit for US$2.1 billion. The acquisition will giveGoogle, whose father or mother firm is Alphabet, an immediateleading place within the wearables market. Google will probably be poised to competeagainst the likes of Apple and Samsung reasonably than having to construct upmarket share from scratch.

Fitbit, based in 2007, is likely one of the pioneers in theactivity tracker house. In keeping with a report IDC printed final 12 months, it was the third-largest wearable firm, based mostly on shipments, trailing Xiaomi and Apple.

Fitbit’s merchandise arecarried in roughly 39,000 retail shops in additional than 100countries all over the world.

“Greater than 12 years in the past, we set an audacious firm imaginative and prescient — to makeeveryone on the planet more healthy,” mentioned Fitbit CEO James Park.

“We now have constructed a trusted model that helps greater than 28 millionactive customers across the globe who depend on our merchandise to stay ahealthier, extra energetic life,” he added. “Google is a perfect partnerto advance our mission. With Google’s assets and world platform,Fitbit will be capable to speed up innovation within the wearablescategory, scale quicker, and make well being much more accessible toeveryone. I couldn’t be extra excited for what lies forward.”

The transaction is predicted to shut in 2020. It’s topic tocustomary closing circumstances, which can embody the approval ofFitbit’s stockholders in addition to regulatory approvals.

Constructed-In Viewers

Google already has its personal branded Pixel Watch, however Fitbit couldprovide it with better market share — and moreimportantly, loyal clients. Different tech companies, notably Microsoft, have realized it’s straightforward sufficient to launch a product in an establishedmarket. Nevertheless, getting clients to change to a brand new platform is extremelychallenging.

With 28 million customers, Google will probably be a longtime participant — however willit proceed to advance Fitbit’s core mission for these customers?

“Earlier than the acquisition, Fitbit was clear they weren’t inselling to anybody not in a position to proceed their mission of assistingconsumers in residing a wholesome way of life,” mentioned Julie Sylvester,producer of the upcoming CES 2020 Sports activities & Health Tech and Wearable Tech Summit.

“With the acquisition of Fitbit, Google is adopting know-how thatwill develop their experience within the sensible watch space and addfunctionality to their ever-expanding wearables market,” she toldTechNewsWorld.

“The benefit is they’re going to have the ability to mix the Googleknowledge with the Fitbit simplicity of design,” Sylvester added.

This isn’t the primary time Google has made an acquisition toestablish its presence in an current class.

“As Nest customers found, Google has a ‘transfer quick and break issues’strategy to shopper electronics merchandise,” mentioned Steve Blum, principal analyst at Tellus Enterprise Associates.

“Its continued help of any specific piece of Fitbit {hardware} willdepend on how properly it ‘suits’ into Google’s general enterprise mannequin,”he instructed TechNewsWorld.

Enterprise as Normal

For many Fitbit customers, it doubtless will probably be enterprise as normal, even when theproducts fall beneath the better Google model. If something, Fitbitproducts might be extra progressive, because of Google’s deep pockets.

“The first impact on Fitbit customers will probably be unseen,” mentioned Roger L.Kay, principal analyst at Endpoint Applied sciences Associates.

“Google is a great firm, they usually’ll doubtless do some innovating thatmakes it into the Fitbit merchandise over time,” he instructed TechNewsWorld. “Maybe AI will probably be a type of.”

Most significantly, Google will doubtless need to preserve the Fitbit brandbecause it already has a stable market presence and is second solely tothe Apple Watch within the wearables class defined Kay.

The look of Fitbit might change beneath the brand new possession — at the very least tocreate one thing resembling synergy with Google.

“System type elements will merge with extra Google software program in andaround Fitbit’s, and higher well being and train information for Pixel Watch,”mentioned Roger Entner, principal analyst at Recon Analytics.

Information Assortment

A far greater issue to contemplate is that Google could have loads ofdata from these 28 million customers. Fitbit’s privateness coverage signifies thatGoogle might acquire entry to call, e mail, date of beginning, gender,health objectives, and even top and weight.

Client belief is amongst its most paramounttenets, Fitbit has mentioned, with robust privateness andsecurity tips constructed into its DNA. The acquisition is not going to change that, in line with the corporate, which promised that Fitbit well being andwellness information is not going to be used for Google adverts.

Google could produce other plans in thoughts, in fact, particularly over the lengthy haul.

“Google will combine Fitbit into its information assortment and analysisuniverse,” Entner instructed TechNewsWorld.

“The units will turn out to be extra interoperable with Android,” he predicted, including that the trackers most likely will turn out to be extra highly effective when it comes to information assortment and evaluation.

Customers’ information “will probably be aggregated with all the pieces else Google has onthem and monetized nonetheless doable,” mentioned Kay. “The entrance finish ought to look about the identical, and the bigger query of whether or not folks ought to fear about what Google is aware of about them is a little bit of a door-slam after the horse has already bolted.”

Google — or extra importantly Alphabet — could have branched out into aplethora of companies, together with the event of autonomousvehicles, however its core enterprise continues to be based mostly on promoting on-line adverts.

“Which is about amassing, cross referencing and publishing information,”mentioned Tellus Enterprise Associates’ Blum.

“Fitbit collects an amazing quantity of knowledge from its customers, andGoogle will need to mash all of it up with geo-referencing, e mail, searchhistory and each different sort of information it has,” he added.

“Most customers most likely gained’t care, and possibly will see profit fromthe sort of cross-referencing Google can do — with well being information, forexample,” Blum famous. “Some customers gained’t like that in any respect. If Google istransparent about what it’s doing, and follows the sort of proceduresthat the brand new California Client Privateness Act mandates, there shouldn’tbe an issue. That’s an enormous if, although.”

Getting Private

The difficulty actually isn’t concerning the assortment of knowledge, as Fitbit already has collected an enormous stash of knowledge from its customers. The change is that Google quickly might have entry to it.

“Most individuals paid no consideration over the previous 15 12 months or in order Googlecreated a composite digital twin of everybody, actually within the UnitedStates and plenty of different locations as properly,” mentioned Kay.

Nonetheless, if that is so, it might lead to some clients leaving theFitbit ecosystem.

“The individuals who don’t care the place their information goes is not going to thoughts Google,and people who do are — or will probably be — with Apple,” added Recon Analytics’Entner.

For some the truth that any firm could have entry to such highlypersonal info could stay a deal breaker within the wearablescategory.

“I already drew the road personally at sensible assistants,” saidEndpoint Applied sciences Associates’ Kay.

“I don’t need stay microphones in my home with unknown lurkers on theother finish, and health monitoring is much more intrusive and I’mdefinitely not down for that,” he mentioned bluntly. “Clearly othersdisagree, and the well being aspect of private trackers will be genuinelyuseful. It’s fairly doable that sooner or later I’ll be pressured to wearone as a result of my physician or insurance coverage firm insists.”