Did Google just buy its way out of failure?

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Fitbit and Google

Google announced its surprise acquisition of Fitbit, one of the world’s leading wearable device makers, for $2.1B.

It’s a hail mary.

And it could work.

Google desperately needs Fitbit’s hardware and users to resuscitate its dying wearable business and breathe new life into its Android-based health platform. Without Fitbit, Google risks being completely boxed out of the wearable market—losing out on terabytes of user data and stunting its Android platform.

From underdog to juggernaut

Wear OS, Google’s wearable operating system, is widely regarded as a failure, controlling a paltry 5-10% of the smart wearable market in North America. Fossil, the largest maker of hardware that runs Wear OS, controls just 4% of the wearable market.

Rival Apple controls a commanding 38% of the smart wearable market. Samsung controls a more modest 11% of the market, but grew more than 100% over the past year. If you narrow the market to just smartwatches in the US, the numbers get even more worrisome for Google: Apple, Samsung, and Fitbit collectively sold 88% of all smartwatches in 2018.

To claw its way back into the running, Google took aim at Fitbit, who makes up an impressive 24% of the wearable market.

Overnight, Google’s market share skyrocketed from measly to serious contender.

The effect of Google acquiring Fitbit

Google needs better hardware. Unlike its rivals, Google doesn’t build its own smartwatch or wearable hardware, relying instead on manufacturers that have been unable to keep pace with Apple and Samsung.

Consumers notice, too. Wear OS smartwatches are underpowered and evolving slowly. Reviews are often mediocre and critics give lukewarm recommendations.

Without any successful wearable tech in its portfolio, Google seemed on the verge of letting die its dream of a competitive smartwatch.

With its acquisition of Fitbit, however, Google takes ownership of a rich product portfolio of smartwatch and wearable hardware. When it could make none, Google simply went out and bought successful wearables.

Hardware matters for software

From Google: "Our hardware business is still relatively young, but we’ve built a strong foundation of capabilities and products, including Pixel smartphones and Pixelbooks, Nest family of devices for the home, and more."

Wear OS—and Google’s entire wearable platform—tries to run a bulky operating system on mediocre hardware. Consumers flock to powerful Apple Watches and efficient Fitbit wearables.

When Google can’t find good hardware from third party manufacturers, it has few options other than to build everything in-house. Attracting users and developers to its platform can’t wait when Apple and Samsung are already light-years ahead.

Speed is king and Google is running out of time.

Selling good hardware affects more than just smart wearable market share. As Apple has shown, hardware sells hardware. Consumers buy watches, phones, and computers within an ecosystem. For many consumers, the superiority of the Apple Watch is a convincing reason to buy an iPhone.

And hardware sells software.

With Fitbit under its control, Google will likely revamp Google Fit, an app for iOS and Android that aggregates your health data from different integrations. Pairing a Fitbit to a Pixel—or any Android device—ought to be dead-simple.

Great hardware brings Google’s software to more people and entrenches its existing user base by encouraging them to link together more Google services. Over time, Fitbit can strengthen Google’s data pumps and pull users deeper into the Google ecosystem.

Not successful (yet)

Google, however, did not buy success.

It merely avoided imminent failure. What Google chooses to do next with Fitbit will determine whether or not it has a serious chance of competing with the dominant players.

First, Google needs to make clear its intentions.

Without any clear plans for the future of Fitbit and how it will be integrated into Google’s developer ecosystem, Google undermines developer confidence in the Fitbit platform. Worse, Google’s tendency to shutter projects and services makes Fitbit a riskier platform for developers interested in creating wearable apps.

Keeping developers engaged and maintaining trust with the developer community sets a strong foundation for future growth.

Second, Google should streamline the developer experience between its developer tools and Fitbit.

Improving developer experience will help developers navigate and integrate different Google services. Android developers should be Fitbit—and Wear OS, Nest, and Chromebook—developers, too. Happy developers build better apps for more devices.

Lastly, Google needs to move fast to unify the consumer experience between Fitbit and Google’s existing services. Jumping between different Google hardware needs to be both pleasant and magical.

Google has a chance. It has the market share. Now it just needs a plan.

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