Google is getting serious about the wearables market with the announcement that it has agreed to buy Fitbit for $2.1 billion. The deal, which is still subject to regulatory approval, would make Google the largest wearable tech OEM in the U.S. from an ownership perspective as of Q2 2019 according to the NPD Connected Intelligence Industry Overview and Forecast. However, becoming a leading wearable tech hardware OEM is not what we believe drove Google into this space; rather, the growing importance of health related data and advancements in health tracking services is what pushed Google all-in on wearable tech.
The Uneasy Waiting Game
Before looking at its goals with the purchase of Fitbit, it is important to note that Google has long been involved in the smartwatch space with its Wear OS (previously Android Wear) platform, which has been used by a number of OEMs over the years including Motorola, LG, and Fossil. In addition, its Google Fit software platform has collected a wide range of fitness and health data. However, Google always appeared to be playing a game of wait and see when it came to wearable tech, as Wear OS development lagged and Google watched as Apple took control of the U.S. smartwatch market. The slow development of Wear OS led many wearable tech OEMs to pull out, or at least reduce their investments in the market (according to the NPD Consumers and Wearables survey, Wear OS based devices comprise just over 15% of total U.S. smartwatch ownership as of the middle of 2019). That left Google at a bit of a crossroads, needing to ramp up investment in Wear OS capabilities and slowly build that market over time, or buy a leading market player with a sizeable base of users to jumpstart the process. Google has obviously chosen the latter with its purchase of Fitbit.
Fitbit Jumpstarts Health Care Focus
Over time, wearable tech devices have shifted in focus. Early fitness trackers and smartwatches focused on basic fitness tracking and notifications. But today’s devices have taken fitness and health tracking metrics to a new level by combining those features with services and interactive data to provide recommendations and sharing capabilities. The next frontier in the wearable tech ecosystem is an evolving range of trackers and smartwatches that bring together true health and medical tracking services through new offerings such as ECG tracking and partnerships in the health, medical, and insurance space.
For a company who sees the potential of consumer health and medical monitoring services, Fitbit checks all of these boxes for Google. In fact, Fitbit reports having over 28 million active users on its platform and is already heavily into features like health related subscription services. It’s also already in deep collaboration with drug makers Bristol-Myers Co. and Pfizer for early detection of atrial fibrillation on its devices. As a result, the purchase of Fitbit has the potential to quickly vault Google up the latter just behind Apple when it comes to positioning itself with an established ecosystem of users for a true health tracking platform through wearable tech devices.
The purchase of Fitbit will not be without complications for Google. Not only will Google have to go through with regulatory approval, but existing Fitbit users may be wary of what Google may do with their personal health and fitness data - despite what the company says to dissuade any privacy fears. In addition, Google will have to figure out how to blend the Fitbit brand and its services in with Google and its own ecosystem. Wear OS platform partners are also now going to view Google as more of a competitor and less of an ecosystem partner, which could affect the broader smartwatch market from a competitive point of view beyond Apple and Google. Regardless of these concerns, the vast potential of future health and medical tracking capabilities and services warranted Google making an aggressive move into the wearable tech space. Fitbit is an established brand that has already been heavily investing in health related services and has the potential to jumpstart Google’s new wearable tech ambitions.