The news of Google’s reported offer to buy wearable tracker company Fitbit was the early Monday news, while the parent company Alphabet’s third-quarter earnings call provided the later day excitement.
Details on the acquisition bid — such as price and timeline, are scant. But even if it’s true, there’s no guarantee that the deal will go through.
The report speaks to the one glaring omission in the Android-maker’s tech empire. Despite its deepening ecosystem of smartphones, smart home appliances, connected car devices and more, the company has never launched its own wrist gadget.
The hole is particularly noteworthy for a company that makes one of the world’s biggest wearable platforms. Google’s development of Wear OS has fueled anticipation for years that it would eventually release a Pixel smartwatch.
Wear OS, née Android Wear, covers a range of gizmos from third-party device-makers, from smaller players like Mobvoi to major tech brands like LG. But one of the most important Wear OS partners is Fossil. The company and its family of owned brands and fashion partners — including Kate Spade, Michael Kors, Emporio Armani, DKNY and others — rely on Google’s software for their smartwatches.
When Google acquired parts of Fossil’s wearable tech and talent in January for $40 million, the big question was where, exactly, that would lead.
In discussing Fossil’s latest device in August, Greg McKelvey, Fossil Group’s executive vice president and chief commercial officer, hinted to WWD about the partners’ work: “[It’s] focused on a future platform that is not the current Wear OS generation that we’re talking about here,” he said. Instead, they’re looking to analogue-style hybrid watches with features closer to touchscreen smartwatches, he added.
How that might square with a potential Fitbit acquisition isn’t clear. But it’s now starting to look like the tech giant is moving to crystallize its efforts on both the software and hardware fronts.
By all analyst accounts, health and fitness are fueling the momentum behind wearables’ growth. According to IDC, shipments of connected wrist gadgets hit 34.2 million units, up 28.8 percent year-over-year in the second quarter of 2019.
It would be no surprise that, if Google aims to do battle with Apple, Samsung and China-based contenders like Xiaomi and Huawei, it would look to Fitbit — which, along with the aforementioned, is among the top five wearables-makers, according to the research firm. The move would also align with Google’s focus on fashion wearables. Fitbit is known for its collaborations with organizations, from Tory Burch, Public School and Kim Shui to last year’s partnership with the Council of Fashion Designers of America.
Conversely, Google’s bid may be especially appealing to the fitness-tracking company. In July, Fitbit cut its 2019 guidance, thanks to lackluster sales of its budget Versa Lite smartwatch.
Following the news, Fitbit’s stock surged — by as much as 41 percent at one point — giving it $1.45 billion in market capitalization.
Shares for Google-owner Alphabet bounced around following its earnings report. The company missed expectations, with earnings per share coming in at $10.12, below the $12.42 that analysts anticipated. But the company raked in $40.5 billion in revenue, with advertising revenue pulling in $33.92 billion — a gain over the year-ago quarter’s $28.95 billion.
Still, it’s clear that Google has plenty of runway for a Fitbit acquisition. And if it does become Fitbit’s new overlord, there’s at least one thing that is very likely: The giant will probably make its new charge take a harder look at things like its Amazon Alexa integration.