Google's oft-discussed goals in the $2.1bn Fitbit acquisition included gaining a strong hardware foundation for a Pixel smartwatch as well as over a decade's worth of Fitbit wearable health data. A less-discussed aspect of the acquisition, however, is Google's impact on Fitbit. It's helpful to explore how Google-as-a-parent impacts Fitbit's value proposition, especially as Google weighs investment in a Fitbit line of devices (i.e., similar to the Google Nest strategy). A continued investment in the Fitbit line will position the devices as a complementary, fitness-focused alternative to the multipurpose, general-use Pixel smartwatch.
Digital assistant identity: While every other major wearable player has a proprietary digital assistant, Fitbit does not. The company instead needed to bring in a third-party assistant, Amazon Alexa (also third in preferred wearable digital assistants), for its Versa 2 smartwatch. Not only will the Google Assistant provide sophisticated capabilities to Fitbit's devices, it is the most preferred wearable assistant according to Omdia's Digital Consumer Insights survey respondents. Google can integrate Google Assistant (the most preferred wearable assistant) into Fitbit's devices, rounding out their capabilities.
FAANG backing: Fitbit's devices didn't have the level of reliability or investment commonly associated with a FAANG player's products (i.e., Apple Watch). Google's support mitigates this issue.
Device portfolio integration: Fitbit was sorely lacking its own supplementary device portfolio (e.g., fitness-focused smart devices) leading to an isolated wearable experience for its users. With Google ownership, a range of Android, Google Assistant-compatible, and "Made by Google" products are now open for integration.
Hardware differentiation: Fitbit's devices already have a strong wearable sensor and hardware foundation. Google, however, can differentiate the devices with the addition of its radar-based sensor technology for gesture interaction (Project Soli) as well as its 1Q19 Fossil intellectual property acquisition.
Hazy Fitbit investment: Even if Google experiments with expanding the Fitbit line over the next couple of years, Google will view the Pixel smartwatch as its flagship wearable device. Consumers will be skeptical of purchasing Fitbit devices which may be discontinued or receive subpar investment/support.
Privacy implications: Google's healthcare privacy issues (i.e., Project Nightingale) will already have alienated many of Fitbit's 25+ million users, many of whom will switch to the Apple Watch or other wearables as replacement cycles come up.
Potential ad targeting: Google has stated that it will not harness Fitbit data for Google ads; however, consumers will be rightfully wary of trusting the promises of a tech giant. For instance, in 2017, Facebook was fined over $100m for sharing WhatsApp data with the larger Facebook organization despite telling EU officials it wouldn't.
Android bias: Many Fitbit iOS users will be deterred by Google's Android proclivity and shift towards the Apple Watch. These lost users tend to be more affluent, leading to lost upsell revenue (i.e., Fitbit premium subscriptions) on top of hardware revenue.
Continued investment in Fitbit can lead to a rounded wearable portfolio for Google. This is key as the value-adding pros of Google's involvement with Fitbit's devices (Google Assistant, device integrations) slightly outweigh the cons (the loss of more affluent iOS or privacy-conscious users).