Google's $2.1 billion purchase of Fitbit wearable devices

Just a few days ago, Google parent company alphabet's purchase of Fitbit (NYSE: fit) was leaked by the media And on Friday, the rumor came true, with Google and Fitbit simultaneously releasing news that a final agreement had been reached Fitbit was acquired by Google LLC for $7.35 per share, with a total value of about $2.1 billion The deal is expected to be completed by 2020, subject to customary closing conditions, including Fitbit shareholder approval and regulatory approval In recent years, the market gap between Google and apple in the field of wearable devices has widened At the same time, China's brand huami (Xiaomi) and Huawei have made gratifying achievements after years of deep cultivation in this field The acquisition, revealed on Friday, represents a move by Google to strengthen its portfolio of wearable hardware products According to IDC's report, the top five wearable manufacturers of Q1 in 2019 are apple, Xiaomi, Huawei, Samsung and Fitbit As Fitbit is pocketed by Google, Google will challenge the top four In Q1 2019, the top five wearable manufacturers are apple, Xiaomi, Huawei, Samsung and Fitbit Fitbit is a very important player in the field of wearable devices and, together with jawbone (which has been liquidated), is regarded as a pioneer and benchmark enterprise of wearable devices In March 2007, Fitbit was founded in San Francisco, which has been 12 years In 2009, Fitbit introduced the wearable wrist device, the first generation Fitbit tracker, before the smart watch Once launched, this product has been well received With the functions of message reminder and sports tracking, it has been popular in North America in less than 3 years According to NPD's market report on fitness tracking devices in the third quarter of 2014, Fitbit's market share has reached 69% - far exceeding the 14% share of jawbone, the second place At this time, apple, huami and Huawei are not in the game Fitbit was listed on the New York Stock Exchange on June 18, 2015, becoming the first share of wearable devices On August 5, 2015, Fitbit's share price reached a historical peak of $51.90 But after Apple launched its apple watch in 2015, the market changed Apple has been adding new health features to its apple watch, such as exercise tracking, heart rate monitoring, electrocardiogram, etc., making it a direct competitor to Fitbit Although Fitbit has also launched a more feature rich smart watch to compete with apple, it has been unable to keep up with the pace of technology giants At the same time, Fitbit also encountered major setbacks in the low and medium-end fields With huami and Huawei entering the market in 2014 and 2015, their bracelets and watch equipment swept the Chinese market at low prices, and Fitbit has little competitiveness in the domestic market In addition, after the tuyere, the market heat of wearable devices is significantly reduced One reason is that the wearable device function was too single and the user stickiness was very low At the same time, wearable devices seem to collect a lot of data, but these data have no more value NPD DisplaySearch wearable device market and forecast report released in early 2014 also predicted that the wearable device market will cool down from 2016, and will not recover until the wearable device becomes a necessity or the industry is integrated With such fierce market competition and the decrease of user stickiness, Fitbit's market share, which originally occupied the top of wearable devices, continues to decline In Q1 2019, Fitbit shipped 2.9 million units, up 35.7% year on year Although Fitbit's growth rate is not slow, it can only be said that other competitors run faster In the current season, Fitbit was surpassed by Samsung and only ranked fifth The continuous decline of Fitbit certainly has its own product reasons, but the top four manufacturers are all smart phone giants with ecological construction ability, which is a main reason Large companies in the field of intelligent equipment have established ecology through continuous product line expansion, and small equipment manufacturers are increasingly difficult to survive Over the past decade, innovative start-ups such as nest, beats, dropcam and flip have been acquired by big Silicon Valley companies Fitbit's share price had been hovering below $7 for more than two years, and fell to a low of $2.81 in August this year Fitbit has been unable to meet the expectations of investors, facing the challenges of declining sales and profit margin But that changed dramatically after the first reports of a possible Google acquisition in September In the letter, James Park, Fitbit's co-founder and chief executive, said: "12 years ago, we set a bold corporate vision to make everyone in the world healthier Today, I am very proud of what I have achieved to achieve that goal We have established a trustworthy brand that can support more than 28 million active users around the world, who rely on our products to lead healthier and more active lives " The above passage is a summary of Fitbit's past achievements First, Fitbit has created a segmented field of intelligent health devices, which has indeed brought new applications in the field of health to consumers Second, it has 28 million active users Fitbit has sold more than 100 million devices so far, using data to provide users with unique personalized health and exercise guidance In addition, Parker said, "Google is the ideal partner to achieve our mission With Google's resources and global platform, Fitbit will be able to accelerate innovation in the wearable device category, scale faster, and make health easier for everyone I'm excited about what's going to happen " Yes, besides apple, what other company can have better resources in the field of smart devices than Google? At the same time, the market reaction was also very positive On Friday, affected by the news, Fitbit's share price soared 15% At present, its share price is $7.14, with a total market value of $1.845 billion Google has been unsuccessful in mobile phones and wearable smart devices Since the launch of smart phones under the pixel brand in 2016, Google has been vigorously promoting the development of hardware, but its attraction to the market has never met expectations Google also spent several years trying to enter the wearable device market through its wear OS platform, but it didn't have a real impact From Google's layout over the years, we can see that the company attaches more importance to software than hardware However, in recent years, Google gradually began to work on hardware The acquisition of companies with technology, experience and relatively mature talents is the fastest way for Google to enter this field, as is the planned acquisition of Fitbit In 2017, Google acquired researchers and designers from HTC's smartphone team for us $1.1 billion to develop its pixel phones In January 2019, Google purchased intellectual property rights of smart watches from fossil for us $40 million Smartwatch is one of Apple's most important segments and a hole in Google's product portfolio Over the years, Google has made progress with partners in this area through wear OS and Google fit, but they need a bigger market Analysts say Google has become the closest competitor in the market to Apple by acquiring Fitbit Through this acquisition, Google has benefited a lot Very good brand awareness Android wear is not a brand product, but Fitbit has been cultivating for 12 years, selling more than 100 million products, and brand awareness has been established in the market Excellent wearable hardware Fitbit's hardware features have always been excellent, and the acquisition will provide a solid foundation for the future development of Google's wearable device line integrated with Android Of course, Fitbit's high attention to motion tracking can also be naturally integrated into Google's existing Google fit applications, thus providing a reliable alternative for the integration of Google watch and iPhone On the other hand, Google's technical capabilities can help Fitbit's Smartwatch (such as versa) become smarter, while providing deeper software integration with Android Intellectual property In January this year, Google will purchase part of intellectual property rights of watch brand fossil smart watch for us $40 million After the acquisition of Fitbit, the combination of Fitbit and intellectual property rights of fossil can finally meet the needs of wear OS Fitbit has a lot of health data Fitbit's activity, exercise and sleep database is one of the largest health databases in the world At the same time, it has a leading health and fitness social network to provide personalized guidance for users Fitbit's fitness tracking device can monitor users' daily steps, calories consumed and length of travel, as well as the number of stairs, sleep time and quality, and heart rate The company has been working with health insurance companies and making acquisitions in the healthcare market to expand its revenue stream Analysts say most of Fitbit's value now may lie in its health data Any push by Google for health data raises privacy issues because the company already knows what users are searching for, where and what they are interested in The two sides of the acquisition inevitably expressed their opinions on the use of the database, said they would still take the privacy rights of health and fitness data seriously, and pointed out that "Fitbit health and fitness data will not use Google Advertising" Medical and health applications After acquiring pebble, vector and coin, Fitbit is shifting most of its focus to healthcare, with several important partnerships with healthcare companies Google and its parent company, alphabet, have already taken action in the field of health care, but Fitbit has gone further than alphabet in building relationships with the health care industry, and has taken steps in detecting arrhythmias and sleep apnea In an open letter, Rick osterloh, Google's senior vice president of devices and services, commented on Fitbit: "Fitbit has always been a true pioneer in the industry and has created fascinating products, experiences and vibrant user communities By working closely with Fitbit's expert team and integrating the best AI software and hardware, we can help drive innovation in wearable devices and develop products that benefit more people around the world " Buying Fitbit is an opportunity to invest more in wear OS and introduce wearable devices made by Google to the market According to Ostrow, Google's hardware business is still relatively young, but it has established a strong function and product base, including pixel smart phones and pixelbook, nest series of household devices, etc "We plan to work closely with Fitbit to bring together their best smart watches and motion tracking platforms Looking forward, we have the opportunity to work with Fitbit to help more wearable people learn from it " "Buying Fitbit makes more sense than trying to build another competitor of Fitbit," said Michael Pachter, an analyst at wedbush securities Fitbit's accumulation of products and data will enable Google to take a rapid step in the field of wearable devices However, most of the market conditions described above are overseas Whether it's Fitbit, or Google's pixel and nest, they are all insignificant in the Chinese market