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The Wearable Fitness Market Is Now Just Apple and Google
By acquiring Fitbit, Google is pushing into the wearables market before there’s nobody left but Apple
Fitness-tracker startups were supposed to be the next tech giants: Companies like Fitbit, Pebble, Jawbone, and Withings raised hundreds of millions of dollars in investment to build devices that log your steps, heart rate, and sleep.
But over the past decade, each of these fitness startups struggled to find a market and eventually failed. Jawbone, which built my favorite wrist wearable in 2016, was liquidated one year later. Nike, the company behind the FuelBand, fired all of its wearables staff and stopped making hardware. Pebble was acquired by Fitbit and also stopped making hardware. And this week, Fitbit, the last health-tracking startup building hardware of its own, was acquired by Google for $2.1 billion.
One primary reason for the failure of these fitness wearables was that the launch of the Apple Watch sucked all the oxygen out of the market. According to one report from technology analyst firm Canalys, Apple has the greatest fitness-tracker market share in North America at 37%, followed by Fitbit at 24%.
So it makes sense why Google is buying Fitbit: For Google, the Apple Watch presents a threat to its product lineup. If Android users want to buy Apple’s wearable, they have to switch to the iPhone as well. Worse, if an Apple Watch owner wants to switch to a Google phone, they need to give up using the watch they’ve spent hundreds of dollars to buy.
Now that it owns Fitbit, Google might encourage other manufacturers to beat that design with the same operating system.
By acquiring Fitbit, Google is pushing into the wearables market before Apple can own the whole damn thing. Ceding the market to Apple would be disastrous for Google. Smartwatches are personal, worn right on our bodies. They appeal to our goals of being healthier and help nudge us toward better habits, like going running or standing up once per hour. If more people buy Apple Watches, more people will become loyal Apple customers.
Tim Cook, CEO of Apple, knows this. He said on the company’s last earnings call, “There will be a day in the future that we look back and Apple’s greatest contribution will be to people’s health.” The company aspires to be the manager of your health records, enhancing them with rich data from the Apple Watch — yet another area where Google will have no way to compete without a wearable device of its own.
Before the acquisition, Google had the WearOS operating system, which could be used by any device maker. Now that it owns Fitbit, Google might encourage other manufacturers to beat that design with the same operating system.
Google will now be able to integrate wearable data with its other products much more effectively than it did with WearOS. The company could, for instance, make Assistant deeply personal beyond just your calendar or smart home, perhaps proactively suggesting a run if you’ve been inactive for a while, or coming up with a tailored workout routine—something Apple has failed to do with Siri to date.
Google will also be able to compete on price. Apple has already won the high-end wearables market. Customers are able and willing to pay $500 or more for its smartwatch. Fitbit, however, is comfortably placed at $150 to $300. Billions of people don’t own a wearable yet, and a Google-branded device at a lower price point would be a formidable competitor to the Apple Watch, especially in emerging markets.
Does Google have a vision for the future of Fitbit? It’s unclear. Google has a poor track record of integrating acquisitions: In 2014, Google acquired Motorola for $12 billion to push into smartphones but did little with the company, eventually selling it at a loss. Same with Nest, which Google acquired for $3 billion and eventually rolled into the Pixel hardware team. If the past is any indication, it will take years for the fruit of the Fitbit acquisition to show, if at all.
In the meantime, the war for your wrist is starting up again. The smaller competitors have been decimated, and there are only two big tech giants left. They’ll be vying for a prized spot on your wrist and the valuable data that comes with it.
