Alphabet Inc, Google’s parent company, has made an offer to buy Fitbit, a US wearable device company, as it considers expansion into the wearable device market, Reuters is reporting.
Although there is no certainty that Fitbit would sell, news of the pending acquisition made Fitbit shares rise 27%, giving the company a market capitalisation of $1.4 billion. While Alphabet shares rose 2% to $1,293.49.
Both Google and Fitbit have not commented on the negotiations. However, a Reuter’s source confirmed negotiations are ongoing. The exact price Google has offered for Fitbit is not yet known.
Google’s renewed interest in wearable devices
Fitbit is not Google’s first foray into the wearable devices market. Earlier in the year, Fossil Group Inc offered to sell the intellectual property to its smartwatch technology under development to Google for $40 million. But, currently, they are yet to develop any wearable device.
It’s no surprise, however, that the company is now showing an interest in Fitbit. It has a chance to enter the wearable device market with offerings like activity trackers and wireless-enabled wearable technology devices that measure data such as heart rate and quality of sleep.
The bid for Fitbit comes at a time when a dominant share of the fitness tracking sector is being taken over by cheaper alternatives offered by Chinese companies such as Huawei Technologies Co Ltd.
If this deal goes through, Google could become more involved in users’ day to day lives. Fitbit’s fitness trackers and smartwatches could be integrated with softwares and apps like Google Map and calendar, opening an array of option like mapping jogging paths and task reminders.
Also, with its popularity and reach, if Google get its own smartwatches, it could become strong competition for smartwatch makers like Apple.
Fitbit’s Versa Lite flop
In July, Fitbit blamed disappointing sales of its newly launched cheap smartwatch Versa Lite, which sold at $160, for the cut in its 2019 revenue forecast.
However, they have just launched a smartwatch, Versa 2, which adds Amazon.com Inc’s voice assistant Alexa, online payments and music storage to the device’s capabilities. Plus, they have just signed a contract with the Singapore government to provide about 1 million fitness trackers and services in a health program.
Founders, James Park and Eric Friedman, have also partnered with health insurers and acquired startups like Twine Health in the healthcare market.
Fitbit is reportedly speaking to investment bank Qatalyst Partners about exploring a sale, last month. So there is a high probability of sale, however, Google’s plans for these assets, if acquired, are not clear.
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