01 November 2019 22:35
Although Google makes some hardware, including Pixel phones and Nest devices, it hasn't made much headway into smartwatches and other wearable devices. "With Google's resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and make health even more accessible to everyone," Fitbit co-founder and CEO James Park said. Analysts weren't surprised by the acquisition, which comes a couple years after rumors first surfaced of Google launching its own smartwatch to compete with the Apple Watch. But the Apple Watch so far has failed to match the extremely high adoption bar set by its innovative predecessors and experts say there's still a question of how many people are willing to pay a premium for a wearable data collecting device. There's also a question of data privacy, which wasn't as big an issue when the Apple Watch first launched four years ago.
Advisory firm Gartner questioned how much customers trust companies like Google and Fitbit not to sell the information they collect to third-party business without permission. The wearable fitness tracker company also said it never sells personal information and that its health and wellness data will not be used for Google ads. Tech research director Ramon Llamas of International Data Corporation credited the company with tackling the issue of privacy head on right out of the gate, but noted that Fitbit may have already boxed itself in. "If you take a look at some of the services Fitbit has put together, a lot of that incorporates your personal data in order to provide some insights - how much you've been working out, your intensity, how much sleep you have gotten," he said. It's the kind of big acquisition Google has done before (more money than YouTube, less than Nest or DoubleClick), but this one seems to have struck a particular nerve.
Whatever happens in the immediate aftermath, Google is going to have a big new team, a big new set of wary users, and a lot of big organizational issues to figure out. In the short term, Google is clearly aware that Fitbit customers are going to be a little spooked. But let's start by answering the big, seemingly simple question: why did Google want to buy Fitbit? The general reasoning is this: Google has a serious hole when it comes to wearables and it hasn't been able to develop its own way out of it, so it needs to buy its way out. In short, Google wants to build smartwatch and fitness band hardware and Fitbit helps them do that more quickly. Is Google buying Fitbit to try to shore up Wear OS's many issues? But in the short term, I think Google's reasoning really is what it says: hardware chief Rick Osterloh wants to be able to make wearables inside Google's hardware division, so he bought himself a wearables hardware company for $2.1 billion. (As an aside: Google's recent $40 million Fossil acquisition didn't end up going into Google's hardware vision, it was put under Hiroshi Lockheimer — who runs Android, but also Chrome OS and a dozen other software products.) Rick Osterloh knows a thing or two about Google mucking up a big consumer electronics acquisition Google, like all tech giants, has bought a lot of companies. In fact, Rick Osterloh himself was collateral damage in one of the early messes: Google bought Motorola, squandered every opportunity it had with it, and eventually spun the whole thing off to Lenovo. Osterloh was the president of Motorola and lived through that mess — only to come back years later to lead Google's newly unified hardware division. So Osterloh knows a thing or two about Google mucking up a big consumer electronics acquisition. That might be why things seem to be going so smoothly with the HTC team, which Google bought in 2017. But if Osterloh can navigate integrating Fitbit into his team as well as the HTC integration has gone (and let Pichai manage whatever comes out of the Department of Justice), we could start seeing the fruits of this acquisition surprisingly soon. It has a huge user base and new watches it literally just released, which customers will expect to be able to keep using for years to come. That's why, to my eye, the Fitbit acquisition looks a lot more like another Google hardware purchase: Nest. Integrating two company cultures is always difficult, but executives didn't make it any easier by buying Dropcam and folding it into Nest right away. Google needs to do everything it can to support Fitbit users But the core issue for both companies is that they were vertically integrated hardware and software companies before they were bought, and Google will need to figure out how (or even whether) to tease those things apart. Doing all that while not forgetting to do the right thing by Fitbit customers is going to be a very big challenge. And all of this is only looking at this acquisition in terms of what it means for Fitbit and Google's hardware division. One of the things that initially baffled me about this Fitbit purchase is that I didn't see how it could help Wear OS with its biggest problem: Google couldn't replicate the Android model of many manufacturers driving adoption, which then drove processor innovation. It would be a damn shame if Google's acquisition led to less smartwatch competition for Android users The answer is that Google didn't buy Fitbit to solve that problem. Google is still working to solve it directly — and, at the same time, reassure hardware partners it will still support them even though it's going to start competing with them directly. We're looking forward to collaborating with Fitbit to bring the best of our smartwatch platforms and health applications together, and enabling our partners to build the next generation of wearables. I would say it would be a damn shame if Google's acquisition ultimately led to less smartwatch competition for Android users.