The wearable business is apparently a tough nut to crack for any company not called Apple. Rumors began percolating several weeks back that Fitbit was putting itself up for sale, and now we know who its suitor might be. According to Reuters, Google parent company Alphabet is in talks to acquire Fitbit, but neither company is talking right now.
Fitbit was one of the largest makers of wearable devices, going all the way back to its early fitness trackers. However, consumers have started asking much more from their wearables. After it acquired the remains of Pebble, Fitbit started producing more capable smartwatches like the Ionic and Versa. However, its earnings have been on a decline, and the stock price has taken a beating.
Fitbit is stuck between cheaper wearables like those offered by Xiaomi and the more expensive ones from Apple. Its efforts to carve out a piece of the market by relying on fitness and outdoor activities has also been stymied by smaller niche players like Garmin. The company might simply feel the best course of action is to sell before the Fitbit brand ends up devalued like Pebble. That’s where Google comes in.
Reuters reports the companies are in the initial stages of hammering out a deal. It’s entirely possible nothing will come of it, but even the possibility of a Google/Alphabet acquisition caused Fitbit shares to shoot up 27 percent. Alphabet’s shares rose a more modest 2 percent on the news.
Alphabet has been increasing its presence in hardware over the last several years. It acquired Nest, which now makes various smart home products under the “Google Nest” brand. Google also makes the Pixel smartphones and Pixelbook laptops. It hasn’t produced its own smartwatches despite numerous rumors, but that may be due to the abysmal state of the Wear OS platform. If Google gobbled up any amount of the tiny market for those watches, its partners like Fossil would likely cry foul.
Alphabet’s interest in acquiring Fitbit may indicate it’s looking for a new approach to wearables. It’s unclear if Fitbit would remain an independent company inside Alphabet like Nest was at the start or if it would merge with the Google hardware team like “Google Nest.” Any acquisition would signal a big change for Google’s smartwatch strategy, though.
- 1 in 6 US Adults Now Own a Smartwatch
- Fitbit Announces Versa 2 Smartwatch With Alexa
- Growth of Wearables Expected to Continue Dropping next Year