Google is acquiring American wearable maker Fitbit in a $2.1 billion dollar move that looks a lot like the ad-search giant's previous attempts to buy its way into a hardware business.
After five years, nobody is wearing Google's Wear OS
Google announced it would pay $2.1 billion for Fitbit, with its hardware executive Rick Osterloh stating in a blog post that the acquisition was "an opportunity to invest even more in Wear OS as well as introduce Made by Google wearable devices into the market."
Nest-level privacy promises
The deal has raised obvious privacy concerns due to Google's position as an advertising network that seeks to track individuals and collect data about their behaviors to develop more persuasive advertising strategies.
Fitbit issued its own press release stating, "consumer trust is paramount to Fitbit. Strong privacy and security guidelines have been part of Fitbit's DNA since day one, and this will not change. Fitbit will continue to put users in control of their data and will remain transparent about the data it collects and why. The company never sells personal information, and Fitbit health and wellness data will not be used for Google ads."
But once Fitbit is part of Google, the web promises of a former company won't be any more valuable than the assurances Nest once gave after it was similarly acquired by Google's umbrella Alphabet.
Back in 2015, Nest co-founder Tony Fadell assured Nest customers that "when you work with Nest and use Nest products, that data does not go into the greater Google or any of [its] other business units," and said its new ownership "doesn't mean that the data is open to everyone inside the company or even any other business group - and vice versa."
That changed when Google restructured Nest and linked it to Google Assistant. The company also closed Nest accounts, making it mandatory to sign up for Google accounts to use Nest hardware.
Android fans imagine wild synergy
Writing for The Verge, Chaim Gartenberg wrote that "The acquisition makes a lot of sense: Google has spent years trying (and largely failing) to break into the wearables market with its Wear OS platform, but it's struggled to make a real impact."
Gartenberg added, "Fitbit's hardware chops have always been great, giving Google a much stronger foundation to build on for future Android-integrated wearables devices."
Fitbit has created an extraordinary number of smartwatch and activity bands over the past few years, none of which have any capacity to run Android. There is absolutely no "foundation" for Android to sit on. That was an intentional choice.
Two years ago, Fitbit's director of software engineering Thomas Sarlandie explained in an interview why Fitbit intentionally avoided licensing Google's Android-based wearable OS.
"Android imposes a lot in terms of hardware and design," Sarlandie said. "We've been designing our own products. That's how we get better battery life; that's how we get a form factor that's more adaptive to fitness. We think the product we built this way is a better smartwatch experience for our users, because we're able to have more control over what compromises we're making and what chipset were going to develop."
Fitbit had earlier acquired Pebble specifically to obtain a wearable platform OS that could allow it to remain independent from Google and not held back by Android.
"When you're using Android Wear, you have to respect their interface and you're very limited in terms of what you can do in terms of customization," Sarlandie said. "For all those reasons, it really makes sense for us to keep working on our own platform."
But it doesn't make any sense for Fitbit to keep working on its own platform anymore, because the simple OS it acquired from Pebble isn't very sophisticated. It was just all Fitbit could afford to buy as an option to using Wear OS.
Fitbit didn't want Wear OS, but Google also doesn't want Fitbit OS
Google has tons of money to invest in its Wear OS platform, but it simply hasn't been aggressive in pushing it forward--largely because nobody was showing much interest in using it to build products. Even Google's largest licensee Samsung created its own Tizen based wearables rather than codeveloping products using Wear OS.
Without dumping Wear OS, Google doesn't really benefit from owning Fitbit hardware that can't run Wear OS, or a new Fitbit OS that is itself old and simple and isn't optimized to run on Wear OS hardware. But even if it bought Fitbit purely for the talent, Google has another problem standing in the way of developing a Pixel watch from scratch: Google lacks any source for building high-performance wearable hardware.
It is specifically lacking a silicon hardware vendor interested in building something like Apple's 64-bit SiP used in Apple Watch. Apple's wearable chip shares its CPU and GPU core designs with Apple's other Ax-series SoCs used in iPhone and iPad, making it vastly cheaper to maintain.
Google has some silicon experience just from developing a custom Image Signal Processor for its Pixel phone, but if it actually learned anything from that fiasco, it was that custom silicon is an extremely expensive, high-risk project. It would be asinine for Google to build an entirely custom watch after proving it couldn't even sell a slightly customized Qualcomm phone.
The wishful thinking surrounding Motorola
The fantasy that Google could buy an outside hardware maker, shake a magic wand, and turn all of that company's products into "Androids" all programmed to destroy Apple was earlier dreamed up when Google announced its plans to buy Motorola Mobility. In addition to the Android phones Motorola was already selling, various bloggers imagined that Google could turn Motorola's setup TV box business into a revitalization of Google TV.
Instead, Google sold off Motorola's TV unit for scrap and subsequently reinvented various new versions of a TV box, using Android or not, all without any real success. Most TVs now ship with a non-Android "smart OS," and most set-top boxes have no connection with Google, whether on the low-end with Roku or the premium-end with Apple TV.
Motorola didn't even result in a successful phone business for Google. Within two years it did nothing but lose hundreds of millions of dollars and lay off its workers to be sold off to China as an Android brand.
Google spent five years on Wear OS
Dieter Bohn of the Verge tweeted "this is about Google getting smarter at making wearable hardware."
Yet Google has spent five years working on wearables -- initially announcing Android Wear in early 2014, a full year before Apple Watch arrived. Yet all this time later, while Apple has refined its product into an increasingly popular wearable achieving double-digit growth globally, even Android Authority called Google's efforts "too messy to recommend."
Earlier this year, C. Scott Brown wrote for the site that, "after five years of development and refinement, you'd think Wear OS would be a strong contender within the wearable industry and something a reviews site like Android Authority would recommend. However, that's not really the case."
It's not just wearables that have eluded Google. In both tablets and phones, the company has been unable to dictate to a third party partner how to build a successful device across a series of Nexus introductions; has been just as bad at setting up a design team tasked with building an original product like such as Pixel C tablets or Pixel branded notebooks or Pixel phones; and has been just as dismal at paying a foreign team to build new products under the Google name.
That means Google will face considerable pressure to close a deal that at best could simply give it access to real-world health data, with the potential to put Assistant on a wearable it could market to iPhone users. And if it can't gain antitrust approval to complete the deal, it reportedly has to pay $250 million reverse termination fee to Fitbit.