Google may not land a great business in Fitbit immediately
Fitbit, which makes a range of wearable devices, may be best known for its fitness trackers, which monitor heartbeat, calories burned, and sleep quality. The company now also makes smartwatches that can be used for fitness or health monitoring. Some Fitbit watches even double as payment devices.
Fitbit’s annual revenue has fallen for the last three years. Last year, its revenue fell to $1.5 billion from $1.6 billion in 2017 and $2.2 billion in 2016. The company also posted losses of $185.8 million in 2018 and $277.2 million in 2017.
Although Fitbit’s business has been doing well lately, it isn’t out of the woods yet. The company recently lowered its 2019 revenue guidance by $95 million due to weak demand for its Versa Lite smartwatch.
Fitbit looks promising
While Fitbit’s financial performance has weakened in recent years, it still looks like a good fit for Google. Purchasing Fitbit could jumpstart Google’s entry into the smartwatch market, which Apple currently dominates. The smartwatch market offers a massive revenue opportunity—Allied Market Research expects it to grow to $31.1 billion by 2025 from $9.3 billion in 2017.
Moreover, purchasing Fitbit would add fitness tracking to Google’s digital health business. The global fitness tracking market could grow to $62.1 billion by 2023 from $17.9 billion in 2016, according to Allied Market Research.
Google could solve Fitbit’s problems
Fitbit’s stiff competition may be behind its financial deterioration in recent years. Although Fitbit helped pioneer wearable devices, Apple now dominates the space. Joining the Alphabet family would give Fitbit access to powerful product development and marketing resources. Fitbit could leverage these resources to fight back and retake its lost ground in the wearable device market.