We don’t usually cover mergers and acquisitions here at Health Tech Insider, but this news warrants an exception. Fitbit has announced that it will be acquired by Google for about $2.1 billion. We won’t dwell on the fact that the company is only 12 years old and that its IPO just four years ago came in at about $350 million.
One of the key points in the company’s history was its early strategical pivot from consumer electronics to digital health technology. (This is a theme about the wearables industry that we’ve been highlighting for years here.) And it is in this light that we think the Google acquisition makes the most sense.
If you believe that the future of health tech wearables — including the Fitbit bands and smartwatches — lies in the corporate marketplace, then Google brings enormous assets to the table. The company already has a strong reputation in the enterprise segment, through its Google Cloud Platform. Fitbit Health Solutions relies heavily on cloud services to provide employers with employee fitness and wellness solutions.
Google also has the cash and other resources needed to scale any product. This will be essential as Fitbit’s product lines start to compete more directly with Apple Watch. Where Apple more or less requires commitment to the entire Apple platform, Fitbit solutions are more agnostic. Fitbit also has a price advantage at this point, which will also be more attractive to corporate customers making volume purchases. Apple does not play as well in enterprise settings, so the Google/Fitbit combination should give the company a competitive advantage.
We expect this acquisition to accelerate the shift the focus from individual exercise enthusiasts to the health and fitness of large corporate populations, driven by employers, insurers, and healthcare service companies.