Google acquires Fitbit
Google recently reached a deal to buy Fitbit Inc – a fitness wearable company for roughly $2.1 Billion. A move to compete in the wearables market which is dominated by Apple and Samsung.
$2.1B, Piece of Cake!
While $2.1 Billion is a lot of money in many circles, in this case, it’s a drop compared to Google’s $121 Billion cash hoard. Also, to put this deal in context, when the announcement was made Google’s market cap (Total Value) saw a $9 billion increase, that’s about 4.5 Fitbits.
What’s this deal worth?
To Google, a better opportunity to leverage on Fitbit’s 27 million users and a wide distribution network to grow its revenue. Also, Fitbit has about 300 U.S Patents in the wearable space, that should count for something.
To Fitbit, definitely a lot more as this deal was a lifesaver for Fitbit, which lost money nine out of the last ten quarters and has seen a significant drop in its value in the past two years.
Google’s other successful acquisitions.
When a company reaches maturity a good way to ensure constant growth and innovation is by acquiring smaller companies. Since inception, Google has acquired more than 200 companies, including Android ($50 million), AdMob ($750 million), HTC's Pixel unit ($1.1 billion), Waze ($1.15 billion), Youtube ($1.65 billion), and Doubleclick ($3.1 billion). These acquisitions have been a mix of success and unsuccessful ones such as Motorola Mobility which was bought in 2011 for $12.5 Billion only to be sold to Lenovo for $2.9 Billion in 2014.
Questions on people’s minds:
Would Google and Fitbit continue to run separately or would they be merged?
Would Google use data from Fitbit for advertising?