It seems that the wearable business is a tough nut to crack for any company not called Apple. Rumors began percolating some 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 debate to acquire Fitbit, but neither company is talking right now.
Fitbit was one of the major makers of wearable devices, going all the way back to its early fitness trackers. However, consumers have started the remains of Pebble; Fitbit started producing more capable smart-watches like the Ionic and Versa. However, its earnings have been on a decline, and the stock price has taken a defeat. News of a latent Alphabet Fitbit takeover comes after reports in September claimed Fitbit was contemplating a sale as it struggled to find its place in 2019. Through its Fitbit Versa wearable reported strong sales, the firm is being squeezed by the Apple watch at one end and a cheap Chinese fitness bands at the other.
Fitbit is trapped between cheaper wearables like those offered by Xiaomi and the more expensive ones from Apple. Its effort to carve out a piece of the market by relying on the 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 brands end up devalued like Pebble. That’s where Google comes in. Reuter’s rumoring that the companies are in the early stages of hiding out a deal. It’s entirely sure that nothing will come of it, but even the possibility of a Google/ Alphabet acquisition caused Fitbit shares to shoot up 27 %. Alphabet’s shares rose a more modest 2% on the news. Alphabet has been mounting its presence in hardware over the last few years. It acquired Nest, which now makes different smart home products under the “Google Nest” brand. Google also makes Pixel smartphones and Pixel laptops. It hasn’t produced its own smart-watches despite numerous rumors, but that may be due to the abysmal state of the Wear OS platform. If Google gobbled up some amount of the minute market for those watches, its partners like Fossil would likely cry foul.
Alphabet’s interest in acquiring Fitbit may show it’s looking for a new approach to wearables. It’s if Fitbit would continue to be 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 points towards a big change for Google’s smart-watch strategy.