Nilesh Chandra, healthcare expert at PA Consulting, discusses Google's acquisition of wearables company Fitbit.
Google is acquiring wearables company Fitbit for $7.25 per share in cash, valuing the company at $2.1 billion. Fitbit launched in 2007 and was considered a pioneer of the consumer fitness tracking market, quickly becoming the market leader. Other players have since entered the market including Apple, Garmin, and Samsung. Shares of Fitbit rose 15% on Friday following the announcement. In July 2015, Fitbit's stock was valued at $47 per share.
Industry analysts see this as a data play by Google as Fitbit's devices now collect data—such as number of steps taken, sleep duration, menstrual cycles and heart rate—from 27.3 million users.
Nilesh says: "Google has shown themselves adept at making similar moves in the past on data (e.g. Waze). They are behind both Apple and Samsung in wearables, so Fitbit makes sense for Google."
He adds: “To many, patient data represents the holy grail and the true catalyst for change in the healthcare industry. With big tech moving aggressively in this direction, Google's latest bid to acquire Fitbit is perfectly consistent with its interest in democratizing access to patient data."
Fitbit has sold more than 100 million devices and supports a global community of millions of active users, utilizing data to deliver unique personalized guidance and coaching to its users, the company said. Fitbit has focused on being more than just a hardware company and worked to build an immersive experience for consumers from the wrist to the app, designed to help users understand and change their behavior to improve their health.
The company has been partnering with health insurers and deepened its reach into healthcare with a new premium subscription service for users that offers coaching and personalized insights mined from its health data. In August, Fitbit said it had signed a contract with the Singapore government to provide fitness trackers and services in a health program it said could reach up to 1 million users.
The deal is expected to close in 2020, subject to customary closing conditions, including approval by Fitbit’s stockholders and regulatory approvals.
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