Google Buys Fitbit
Do you wear a smartwatch or a Fitbit device? I do.
I’ve had an Apple Watch since 2016, and before that I had a Fitbit. Since beginning my career and working in an office five days a week, I realized it was important to stay accountable for my health while I was living a relatively sedentary life.
It’s very easy for me to get caught up in work and wait two or more hours before I stand up again, which is awful for a human body. I would come home with aches and pains. Then I got a Fitbit that I could use to set goals for myself to make sure I would get up and walk around to meet my 10,000-step goal.
I’m a competitive person, so having these goals gave me an incentive to start walking around my office. I also try to be aware of my health. I know the decisions I made when I was younger and those I'm making now will greatly impact my life in the future, and I want to do everything I can to make sure I’m able to live long and do all the things I imagine for myself when I approach retirement age.
I’m not alone when it comes to becoming more aware of my health. Wearable technology like smartwatches and Fitbit devices have helped make people more health-conscious. And the technology continues to improve every year, with new ways to become more in tune with your health.
With my Apple Watch, I enjoy the feature that tells me to stand up every hour. There are also weekly and monthly challenges, and you can even compete with a friend who also has an Apple Watch.
Smartwatches Market Could Reach $46.6 Billion in 2024
It did take some time for this technology to take off, especially since smartwatches can be on the pricier side, similar to a smartphone. A newer and better version comes out every year, so it can be hard to keep up with the latest technology.
At first, it was hard for companies to understand what consumers wanted in a smartwatch or device — there was a little bit of a learning curve in the first few years.
According to GlobeNewswire, the global smartwatch market is growing at a CAGR of 20.7% for the forecast period, reaching $46.6 billion by 2024. The same market forecast reported that the main factors contributing to growth in the market include technological upgrades to smartwatches, increasing demand for wireless health monitoring devices, and remote patient monitoring.
The market has grown quite a bit in the last two years. Allied Market Research reported that in 2017, the global smartwatch market was valued at $9,264 million. Also in 2017, the North America region generated the highest revenue in the global smartwatch market. According to the predictions of the market, it’s growing and becoming more robust, which could be why tech companies are racing to become the global leader of this market.
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Google Buys Fitbit
It was announced last week that Alphabet’s Google was looking to buy Fitbit, the maker of wearable fitness-focused sensors and devices. Fitbit shares surged more than 30% that day when there were speculations about an offer from Google. Only a few days later, Fitbit announced that it would be officially acquired by Google for $2.1 billion.
Back in April 2018, Google and Fitbit announced that they would be working together to “innovate and transform the future of digital health and wearables.” So this announcement probably doesn’t come as a big surprise.
This is a smart decision for Google, and it'll help the company gain more of a lead in this market. It'll be competing more heavily with Apple, one of the market's leaders. Google’s hardware chief, Rick Osterloh, wrote a blog post that discussed how the acquisition could help Google advance its goals for Wear OS (its software for smartwatches). He wrote:
By working closely with Fitbit’s team of experts, and bringing together the best AI, software, and hardware, we can help spur innovation in wearables and build products to benefit even more people around the world. Google also remains committed to Wear OS and our ecosystem partners, and we plan to work closely with Fitbit to combine the best of our respective smartwatch and fitness tracker platforms.
So far, Google has invested in 17 companies in 2019. Over the past 21 years, Google’s history in mergers and acquisitions and investment activity has been very busy. In those 21 years, Google has made 236 known acquisitions. The company has the experience when it comes to acquisitions and investing. When it knows what it wants, it can usually get it. Buying Fitbit will help Google grow and focus its business in a market that is expected to grow over the next decade.
This acquisition will be beneficial for both companies, especially for Fitbit. It’s been difficult for Fitbit to stay ahead. It's had to compete with Apple and its smartwatch, which has been extremely difficult.
Apple’s smartwatch popularity continues to grow, which be one of the reasons Fitbit lowered its guidance for the year in its July earnings release. The company reported weaker-than-expected sales of its new lightweight watch during that July earnings release.
It's been difficult for Fitbit to gain traction with its smartwatches, especially when competing with Apple's popularity. According to Strategy Analytics, as of the end of 2018, Apple owned about half of the global smartwatch market in terms of units shipped.
Google's acquisition of Fitbit will shake things up in the smartwatch wearable market. It could even have Apple fall from the top. You can expect more announcements from Google and its plans for a smartwatch in the very near future.
Until next time,
Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
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