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Technology Google buying Fitbit is good for Google, bad for wearables

17:25  29 october  2019
17:25  29 october  2019 Source:   engadget.com

Fitbit Versa 2 review: There's more than meets the eye

  Fitbit Versa 2 review: There's more than meets the eye Imagine paying $200 for a smartwatch that can count your steps, run apps, stream notifications from your phone, and control your Spotify account, and only needs charging every five days or so. © Provided by Cable News Network, Inc.That's the Fitbit Versa 2. Announced at the end of August, the company's latest smartwatch is available in black, grey, or copper rose aluminum housing, with five different colors of bands. For about $29 more you can pick from two special edition models. A woven watch band and a classic band, along with a 3-month trial of Fitbit Premium, are included for the extra $30.

Google has also seen support for Wear OS dwindle as makers get out of the business or move to their own proprietary platforms. Look at the companies that made the first Android Wear devices: ASUS, Motorola and Huawei. None of them now make an Android Wear / Wear OS watch, the first two stopping in 2017, the third switching to its own OS in 2018. Another reason that Google won't keep Fitbit as a wearables division is that Google is all about partnerships. It wants other people, and companies, to do the running for its software products and services.

Buying Fitbit allows Google to leverage Fitbit ’s well-known brand and established retail distribution to increase the reach of its future wearable products. As the smartphones reach a plateau in key global markets, major tech players are starting to look beyond mobile devices to capture consumers. For Apple, the rising sales of Apple Watch, AirPods, and related services are becoming an increasingly important driver of its business. Notably, Apple’s wearables revenue could surpass that of iPad and Mac combined as soon as late next year. For Google , a bigger push into the wearable market will

If it happens -- and that's already a big if -- it's not going to be good for consumers, is it?

a hand holding a cellphone

Yesterday, shortly before Alphabet's Q3 earnings call, news hit that Google's parent company is considering buying Fitbit. The biggest independent wearables company is a prime target for the search giant, and it's likely to be available for a decent price. Fitbit's business is clearly weak, with Apple and Xiaomi respectively eating away at its high- and low-end markets.

We only have rumors about a sale so far, and the companies have already issued the usual "no comment." But that doesn't mean we can't speculate about how a deal would work and what it might do to the wearables industry. And while Fitbit might need a bailout, and Google might need to bolster its wearables division, this isn't a match made in heaven.

What Google buying Fitbit says about the future of wearables

  What Google buying Fitbit says about the future of wearables The tech giant may acquire one of the original fitness trackers.Reuters reported Oct. 28 that Alphabet is in talks to buy Fitbit. Google still doesn’t have its own hardware for Wear OS, the version of its Android operating system it developed for wearables, and given Google just had its big hardware unveiling event, it seems unlikely we’ll see the rumored Pixel Watch anytime soon. Instead, the 12-year old fitness tracker company may become a part of Google’s strategy to take on the Apple Watch.

Why would Google want to buy Fitbit ? Though Fitbit is a big player in the wearables market, it is struggling to transition from fitness trackers to smartwatches. Google 's Wear OS has not given it much of a foothold, and it has smartwatch ambitions. Could this be a marriage made in heaven or a disaster? If Google has aspirations in wearables , Fitbit is a way in, which could explain the news that Google ’s parent company Alphabet Inc. may have made an offer to acquire Fitbit .

Fitbit is now to be part of Google ’s range of companies. After days of rumors and reports, Fitbit has been acquired by Google for .1 billion. Fitbit CEO James Park unveils Fitbit 's second smartwatch, Fitbit Versa, and first-ever device for [+] kids, Fitbit Ace, along with the Fitbit family account and female health tracking at its launch event in New York, Monday, March 12, 2018. James Park, Fitbit CEO, said “"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.”

For one, it's not likely that Google will turn Fitbit into its wearable hardware division since there's little money in the space. Sadly, the Apple Watch has sucked the air from the market, with scant profits being shared around the remaining players. Google has also seen support for Wear OS dwindle as makers get out of the business or move to their own proprietary platforms.

Look at the companies that made the first Android Wear devices: ASUS, Motorola and Huawei. None of them now make an Android Wear/Wear OS watch, the first two stopping in 2017, the third switching to its own OS in 2018. In fact, these days, the biggest name still making Wear OS watches is Fossil, which knocks out timepieces under its various fashion sub-brands.

a hand holding a watch: fossil© Provided by Oath Inc. fossil

This summer, Canalys found that Fossil's myriad smartwatches had just 4.1 percent of the US market. It shipped around 300,000 devices in total, making it the biggest Wear OS player in the market. (Casio, Polar, Tag Heuer and the Google-backed Mobvoi are the other names still in the Wear OS game). Apple, meanwhile, in the quarter before the Watch Series 5 appeared, managed to ship three million units, or ten times more devices.

Here's how Fitbit can help fix Wear OS

  Here's how Fitbit can help fix Wear OS Now that Google's acquisition of Fitbit is official, the question is what the search giant will do with it. When the news broke on Friday, Google's Rick Osterloh said the company sees the deal as an "opportunity to invest even more in Wear OS, as well as introduce Made by Google wearable devices." For the time being, then, it looks like Google plans to leverage Fitbit's expertise to another push into wearables. Earlier this week, we speculated on some of the ways in which Google's purchase of Fitbit would be bad for wearables. However, there are a lot of things Google could learn from Fitbit to make Wear OS a compelling platform.

Google agreed Friday to buy Fitbit for .1 billion in a move giving the US tech giant a fresh entry in the wearable technology space and helping it ramp up its challenge to Apple. Rick Osterloh, Google senior vice president for devices and services, said the deal means "bringing together the best hardware, software and AI" to bring more wearables to the marketplace. " Google aspires to create tools that help people enhance their knowledge, success, health and happiness.

For Google , the deal could give the company's struggling wearables software unit a boost, although the track record of Google 's hardware acquisitions is replete with expensive failures. But Google can't give up and cede the field to Apple , with its successful Apple Watch, at a time when smart wearables are becoming more For recent investors in Fitbit , which has traded as low as .81 this year, the .35 per share acquisition price represents a quick profit. But for anyone who bought the stock before last year, particularly at the per share 2015 IPO price, the buyout represents a significant loss.

It's clear Google can't make up the ground it lost in the wearables war despite its headstart on the nearest competition. General-purpose users have never embraced Google's wearables as they have Apple's or Samsung's, and it's hard to reverse that trend. The fact that Fitbit can ship more than five times as many wearables as Fossil speaks volumes about both platforms.

Philosophies are another problem: Google makes an OS to farm out to third parties, same as it does with Android. But watches are not, and shouldn't be, a general-purpose computing platform that needs an open, complex OS. Fitbit owns its hardware and software, and while nobody would say Fitbit's OS is more powerful than Wear OS, it's clearly far more popular.

screen of a cell phone: Goodolddays© Provided by Oath Inc. Goodolddays

Even if Google doesn't want Fitbit, even a misty-eyed sentimentalist can see that the company's parts are worth more than the whole. Fitbit has a market cap of around $1.5 billion, pocket change for a company that made nearly $10 billion profit in three months. But that figure gets cheaper when you see that Fitbit has assets likely worth around $500 million. Even after it's paid off Fitbit's (minimal) debt, Google will wind up paying a lot less for the company overall.

The best fitness wearables

  The best fitness wearables There are smartwatches, and then there are fitness wearables. And while it's easy to think they're the same, they aren't. The former offers deep integration with your phone and the option to use apps, music players and mobile payments. Those aren't to be mistaken with fitness watches, which have an emphasis on durability, reliability and accuracy. If you're looking for a watch that's less of a jack of all trades (just a master of a few), this is where we'd have you look.© Provided by Oath Inc.If you're an endurance athlete© Provided by Oath Inc.

If Google didn’t make those devices, you’d be buying them from someone else, like Amazon or Apple and Google wouldn’t be able to draw upon your activities and data. Actually, if you already are buying wearables , it’s likely from Apple, which means Google is already behind. That explains why Alphabet’s stock rose 2 percent on the of the news of the possible FitBit purchase as well. It can use all the help it can get to catch up, and certainly FitBit would be a huge boost. The problem is whether or not what’s good for Google is good for you. The opinions expressed here by Inc.com columnists are their own

Google ’s parent company Alphabet GOOGL has reportedly made an offer to buy Fitbit FIT. Shares of FIT surged in the wake of the reports, and the stock closed up 30.5% on Monday. Fitbit is best known for its fitness trackers and other wearable devices, but has struggled lately due to weak sales of its new lightweight watch. An Alphabet acquisition could give the company a much needed boost. As for the search giant, scooping up Fitbit would potentially help it become a bigger player in the wearables industry, and help Alphabet compete with Apple AAPL in the health and fitness space.

And whoever owns Fitbit gets all of its intellectual property and user data spanning more than a decade. Google's desire to own data, its interest in healthcare and the sheer volume of tracking information on Fitbit's servers more than justifies the purchase. You also get the library of wearables patents that Fitbit owns, both in-house and from acquisitions.

After all, Fitbit isn't just Fitbit; it's an amalgamation of all of the wearables startups it bought back in the glory days. It has the assets and employees from Pebble, Vector, Coin, Fitstar and Twine Health, all of which may have some residual value. Google could mash some of those teams up with those from its January 2019 purchase of some of Fossil's smartwatch R&D and employees.

Google could easily "do a Motorola" to Fitbit, using its assets (and tax writeoffs) to discount the purchase price. It might sell the assets to third parties and retain the patents, useful data and employees. It could even sell the remaining hardware business off to a third party, although it's hard to see who might take up that offer.

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Another reason that Google won't keep Fitbit as a wearables division is that Google is all about partnerships. It wants other people, and companies, to do the running for its software products and services. I could be wrong, and I'd like to be, but it doesn't seem as if Google will upend its strategy for such a minor category. Unless, of course, the reason we've not yet seen a Pixel Watch is because a Google executive saw the prototype and decided to buy Fitbit instead.

(And, with one eye on history, I don't think the situation will play out the way it did with Motorola and Samsung. Google's purchase of Motorola was, at least in part, to make Samsung play nice and not try to push Tizen as a full-bodied Android replacement. I doubt Google would make any serious effort to tether the comparatively small Fossil down to its ecosystem).

You'll notice that, not once, have I suggested Google will bring its engineering and product know-how to help Fitbit. That's because I don't believe Google has much interest in building a device that could beat the Apple Watch. After all, Google makes smartphones and laptops to push its software platforms and partners forward, rather than sell millions of devices on its own.

No, if Google does purchase Fitbit, it's most likely to be in the service of stripping out its assets and shutting down the rest. I'd love to be proven wrong.

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