Google's silence about Fitbit's enterprise health business, which is on pace to top $100 million in annual revenue, is a bit odd.
When Google's parent company Alphabet announced the $2.1 billion purchase of Fitbit you'd think the deal was all about smartwatches and fitness trackers. After all, Google didn't have a smartwatch or fitness tracker under its own brand but does have Android and WearOS. Fitbit would bring Google's hardware unit from scale and maybe enable it to better compete with Apple and Samsung.
Here's the catch: Before the Google buyout rumors surfaced Fitbit's smartwatch and tracker business was valued close to nil. Multiple analysts said Fitbit's enterprise business and the health data from trackers accounted for the company's market cap.
Funny how Google's Rick Osterloh, senior vice president of devices and services, penned a blog post that focused entirely on wearables. He talked up Wear OS and Google Fit and noted that Fitbit's knowhow would "spur innovation in wearables." Osterloh also noted that Google would take health data privacy serious and Fitbit echoed those comments.
Now, if we rewind to Fitbit's previous quarters, CEO James Park was clear that the plan was to be very promotional with trackers because it fed a data flywheel that could be used for better analytics, coaching, and services to both consumers and enterprises. Yes, the Versa Lite didn't sell well and torpedoed a quarter, but Fitbit was all-in on the enterprise.
- Google buys Fitbit for $2.1 billion
- Fitbit landed a deal with Singapore for a wellness program.
- Launched the Versa 2 and Aria Air with premium service.
- And expanded distribution of Fitbit wearables in its UnitedHealthcare deal.
Fitbit has a bevy of enterprise wellness deals on the books and the effort was key to its transformation. I opined that Google should buy Fitbit in 2018 largely for the data treasure trove.
Yet when Google actually buys Fitbit we get a lot of hardware talk. Hmm. It's likely that Google doesn't want any attention paid to Fitbit's enterprise business, which was increasingly part of the healthcare ecosystem. Google and healthcare may mean more regulatory scrutiny. That scrutiny is the most logical explanation about the lack of talk about Fitbit's data or enterprise business.
Here are a few thoughts about what comes next.
- Google is going to botch Fitbit's hardware. Google's track record in hardware isn't so great. Google bought and later sold Motorola. The purchase of Nest has been so-so at best. Google acquired talent from HTC, but its Pixel hardware could be stronger. Google is likely to mix up its own designs with Fitbit and create a few frankenwearables.
- Assuming Fitbit's enterprises want to stay on with Google instead of jumping to Apple's corporate wellness plan, the company has a nice cross-sell opportunity with Google Cloud.
- Google Cloud and artificial intelligence and machine learning services could be coupled with Fitbit's enterprise platform. The combination could give Google a whole new entry into the healthcare market. Keep in mind that Google Cloud CEO Thomas Kurian has a strategy that revolves around selling verticals.
- In the end, Fitbit's data will be the big win for Google, which will fumble hardware and probably scare off a few large healthcare providers. Fitbit, however, will turbocharge Google Fit and layer in more health-related services. Fitbit could turn Google Assistant into a healthcare coach, too.