Google LLC Acquires Fitbit For $2.1 Billion To Take A Bite From The Smartwatch Pie
Apple's wearable segment made a $2 billion positive impact in revenue on the company's balance sheets last quarter. As smartphones have matured, it's now up to companies to decide how to efficiently transport a digital experience directly to users by using smaller form factors. Google's been active in this space through Wear OS (formerly Android Wear), Google Glass and Pixel Buds. Now, we might also see fitness products from the company, as Google has acquired Fitbit.
Google LLC Acquires Fitbit, Inc For $7 Per Share For A $2.1 billion Diluted Equity Value
Fitbit has more than 28 million users active globally. The company's stock soared by 30% earlier this week when it was reported that Fitbit (NYSE:FIT) was negotiating with Google (NASDAQ:GOOG) for a takeover. This surged temporarily halted trading of the wearables manufacturer's stock. 2019 has improved the stock's health as fewer traders are currently short on it.
Google's acquisition will end up in a $2.1 billion cash transfer to Fitbit (NYSE:FIT) , as Mountain View acquires it for $7.35 a share. At this point in time, Google (NASDAQ:GOOG) is looking to expand its presence in the smartwatch segment of the wearable market, where Cupertino tech giant Apple is dominating with the Apple Watch. Apple introduced another strong product in the market last month in the form of the AirPods Pro. Google also acquired smartwatch maker Fossil earlier this year.
Commenting on the acquisition, Google's Rick Osterloh stated,
"Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users," said Rick Osterloh, Senior Vice President, Devices & Services at Google. "We're looking forward to working with the incredible talent at Fitbit, and bringing together the best hardware, software and AI, to build wearables to help even more people around the world."
Through these acquisitions, Google (NASDAQ:GOOG) continues to expand the number of patents present inside its, and Alphabet Inc's portfolio. So far, the Mountain View based company has failed to successfully execute a hardware product. The one product lineup which it did get right was the Google Glass, but hindsight shows that this gadget, in particular, was too early to the market.
Soon after their launch, Google's Pixel 4 smartphones were reportedly unable to sustain a 90Hz display refresh rate. Problems such as these fail to extend the 'early adopter' hype cycle for Google's hardware. Maybe the Fitbit (NYSE:FIT) acquisition will benefit customers through a new fitness-based product that takes the market by storm.
Thoughts? Let us know what you think in the comments section below and stay tuned. We'll keep you updated on the latest.
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