Why is Google so interested in Fitbit?

In early November, Google announced it was acquiring Fitbit for $2.1 billion, a transaction which has polarised opinion. But why is Google interested in a faltering wearables brand?

Acquisitions in the technology world are not unsurprising, especially when it comes to search engine giant Google. This is a company which is constantly pushing the boundaries of normality, testing ideas outside its core competencies and exploring for the next multi-billion-dollar business.

The question which remains in the minds of some is whether Fitbit could be the catalyst for profits, or if this is an unjustified expansion of Google’s ability to pry into the personal lives of users around the world.

$2.1 billion for a failing wearables business

When talking about wearables, it used to be impossible to avoid Fitbit. This appeared to be one of the very few companies who could turn a profit in a segment which flattered to deceive. Until recently that is.

Looking at the financials of Fitbit, the business was heading south very quickly.

Full-year financial results for Fitbit 2015-19 (USD ($), millions)
Year Total revenue Net Income (Loss)
2019 1,434 (320)
2018 1,512 (185)
2017 1,615 (277)
2016 2,169 (102)
2015 1,858 175

Source: Fitbit Investor Relations

In 2015, Fitbit was a rapidly growing wearables brand turning a tidy profit. What made this even more impressive is the failures of almost everyone else to crack the market; wearables was a segment which no-one else seemed to be able to make work, not even Apple.

The trick with Fitbit was simplicity. It didn’t try to take on traditional timepieces with a clunky digital alternative which still had to be tethered to a smartphone, it produced a simple fitness device. It identified a need and fulfilled a purpose, without trying to be too clever.

The issue which it has faced in recent years is two-fold. Firstly, wearables become more mainstream and demanded more functionality. And secondly, mainstream brands were allocating big marketing budgets.

Fitbit attempted to evolve its offering, creating more devices which were more in-line with the smartwatch image of today, but it struggled to compete with the likes of Apple and Samsung when it came to functionality, design, marketing and acquiring new customers who had not previously been interested in wearables. It failed to evolve, adapt and expand.

That said, the barebones of a successful business are still there.

The resurgence of Fitbit as a competitive force

Fitbit is an interesting acquisition for Google. It has a solid and reputable fitness brand, a loyal customer base as well as existing products and IP. The fundamentals of a good business are in place, the reason Fitbit failed is it was not able to advance its business model to the next level of development.

Aside from good products, consumers nowadays are insisting on experiences and an ecosystem of supporting applications. One explanation as to why Fitbit is a failing business is that it was unable to develop the supporting applications, experiences and services to bundle behind the hardware.

This is where Google can help.

With the Fitbit team concentrating on developing new products, the software and services element can be delegated to the Google engineers. With an army of software experts and existing products, Fitbit could certainly emerge as a fighting force on the wearable scene once again.

Aside from the Android operating system which has Google has created for the wearable ecosystem, Wear OS, there are numerous other services which could be more closely linked to the Fitbit products such as Google Maps and YouTube Music. The products could also benefit from the work Google is doing into new areas such as the voice user interface and gesture control.

Bringing together the Fitbit hardware experience, IP and brand, with Google’s OS expertise and software engineering smarts is a very attractive mix.

Why would Google care about the wearable segment?

Firstly, Google is interested in any idea which can make money, and with the right care and attention, as well as patience, you can make money out of just about anything.

Secondly, the wearable ecosystem allows Google to operate in an area where it currently doesn’t.

And finally, wearable products allow it to buildout other investments in areas such as healthcare and smart cities.

Global smartphone market share – 2019
Brand Market share
Apple 31.7%
Xiaomi 12.4%
Samsung 9.2%
Huawei 8.3%
Fitbit 4.7%

Source: Statista

Just like the smart speaker products Google launched in recent years, the greater opportunity is not to profit from product sales, but to build a services ecosystem behind the hardware. Fitbit products with Wear OS allow Google to interact with customers in a new setting, in a new way, while collecting new data.

This data can of course be used to supplement existing advertising models, hyper-targeted messaging is where the money is after all, but it can also offer Google the opportunity to build new services. With a portfolio of fitness related products, Google can collect new data to create new applications as well as buildout the development of existing ideas.

For example, Verily is a research organization devoted to the study of life sciences. Verily works with academia, hospitals and health systems and life sciences companies to improve healthcare. The work is of course technology focused, making best use of data to augment the healthcare industry, and the addition of a portfolio of health and fitness wearable products would improve this proposition.

Another example is Sidewalk Labs, an ‘urban innovation’ investment from Google. The concept of smart cities is quickly gathering steam, and should the right investments be made, software companies could make billions. Wearable devices will be an important element of the smart cities for identification and authentication with public services, payments and interaction with other applications which could emerge.

These are two ideas which already exist in the Alphabet family, but Google does not currently have a venture into fitness and lifestyle. Fitbit it an entry point.

Owning the OS is critical to owning the ecosystem

Google is one of the most successful companies in the world because it manages to position its products and brands in front of people. And perhaps the most important acquisition it made in its history was Android.

The operating system, founded in 2003 by Andy Rubin, ensured Google powered the majority of smartphones across the world. It is free for smartphone manufacturers to use, but this comes with conditions; certain applications have to be installed as default. Aside from these products being very good, accessibility is one of the reasons they are so popular.

Wear OS, the operating system for wearable devices, offers Google the same opportunity. If users are tied into the Wear OS ecosystem, Google can build services and monetize the audience.

However, success for Wear OS has been wayward to date.

Apple devices use WatchOS, Xiaomi have their own as well, Garmin has developed one internally, Tizen is a Linux-based primarily by Samsung, while Fitbit also had their own. No-one was really that interested in Google’s OS when they have proprietary software, as this would mean handing data and the controlling stake in the software ecosystem to Google.

Purchasing Fitbit offers Google the opportunity to get Wear OS into the wild, collecting data to improve its capabilities. Without the Fitbit acquisition, Wear OS would most likely have dwindled and died, but if the Fitbit brand can be reinvigorated, there is every chance Google could be very influential in this segment. Especially as Fitbit already have a health-orientated brand perception.

Data, data, data…

The Google business is built on data. The algorithm powering search engines only works well because it is constantly trained to improve accuracy of results. Google advertising is only successful because it is hyper-targeted. The Maps products constantly need to be fed data to ensure route-planning is most efficient, local businesses are listed and preferences are honed to the user.

Fitbit offers some extraordinary data, which would be very useful for companies like Google.

To make best use of fitness-based products and applications, additional information on the user is often needed. Weight, height, fitness and lifestyle objectives, eating habits are some examples which can be plugged into the application. These devices also track user location, how and when they exercise, heart rate, and sleep patterns. Analysing this information is very useful for fitness-orientated users, but it is also incredibly valuable to advertisers.

It is always worth pointing out that the more people making use of Wear OS, the more data Google is collecting to fuel the advertising machine. Thanks to Deepmind, Google’s AI powerhouse, all of Google’s service make use of user insight to improve the accuracy and profitability.

This is where some of the objections to the Fitbit acquisition have been directed.

How much is too much insight?

There are many in society who are uncomfortable with the amount of information the internet giants, not Google alone, have already and how much additional access they are gaining through acquisitions. There are some who like the idea of Google purchasing Fitbit, but there are also others who question whether this is handing too much power and influence to the search giant.

Some might question how much of a window Google should be given into the personal lives of people around the world.

“The most critical issue is Google’s acquisition of Fitbit’s trove of health and biometric data,” the Electronic Frontier Foundation, an opponent of the acquisition, said. “Obtaining that data will help Google both improve its advertising business and significantly expand its data empire.

“Google’s acquisition of Fitbit will also deprive users of one simple, meaningful choice they could have made: to track their health and fitness without putting that data into Google’s ecosystem.

“And where users have already made this choice—by buying and using Fitbit devices prior to the acquisition—an acquisition destroys those user choices, retrospectively opting them into Google data collection despite their revealed preference to use a Google competitor.”

The Electronic Frontier Foundation has two objections to Google’s acquisition of Fitbit. Firstly, Google is getting too much personal information. A single, private organisation should not have such power. And secondly, such an acquisition would restrict competition in an already restrictive segment.

On the competition side of things, there is a valid point.

Not only is the smartwatch and wearable segment pretty small already, competition is the digital advertising space is also limited. Should Google expand further it would become more powerful in the advertising game, potentially killing off rivals.

The Electronic Frontier Foundation is not alone with its objections to the deal, and the concerns are not going unheard.

In the US, the Department of Justice is considering the impact of the acquisition in terms of data collection and privacy as well as market competition. Down in Australia, the Australian Competition and Consumer Commission (ACCC) has launched a similar investigation which is due to conclude on May 21.

The big question of whether Google should be allowed to acquire Fitbit

By acquiring Fitbit, Google gives itself a leapfrog in the wearable OS segment, it builds out investments in healthcare and smart cities, creates additional revenue streams, allows it to drive forward another ecosystem in its own vision and adds more valuable data into the advertising machine.

For Google, this is an incredibly intelligent acquisition, $2.1 billion well spent.

However, if it is to be successful it has to develop this business intelligently. The Wear OS team should focus on the development of the operating system and supporting ecosystem, while the Fitbit engineers should be empowered to create excellent devices, whether they are simplistic fitness trackers or complex smartwatches.

Enough money has to be thrown at the development teams, but Google has to let Fitbit be Fitbit; it is a successful brand and must be allowed to continue its own path. Let Google engineers concentrate on software, and Fitbit engineers concentrate on hardware.

But the question is not whether Google is smart in acquiring Fitbit, more whether it should be allowed to. The acquisition would enable Google access to a treasure trove of very personal information, as well as posing a potential risk to competition. The internet giants have already demonstrated a sluggish attitude to data privacy, and this transaction offers access to some very personal information.

Authorities will have to assess whether Fitbit would have survived on its own, which looking at the financials is unlikely, and whether Google should be allowed to expand its influence and power through the acquisition of more data.

Fitbit financials tumble but that might not worry Google

Fitbit might not be the profit bonanza it once was, but with sales increasing it offers Google another interface to collect data and launch new services.

Although the financial results do not seem the most attractive at first glance, it is always worth remembering what the new objective of this business is likely to be. Google acquired Fitbit in November, and while the Mountain View residents never say no to money, there is a bigger picture.

Fitbit is most likely about exposure, increasing the number of Google interfaces in society and offering more opportunity for the internet giant to create services. This is where Google’s expertise lies, in software not hardware, but it does occasionally need to encourage the development and adoption of supporting ecosystems to realise its own goals. If more smart devices are being worn by consumers, the greater the opportunity for Google to make money.

“In 2019, we continued to advance our mission of making health accessible to more people around the world by delivering devices, software and services at affordable prices that help improve peoples’ health,” said CEO James Park.

“As a result, we sold 16 million devices and our smartwatch business grew 45% at retail, due to strong demand for Versa 2. Our community of active users increased to nearly 30 million, and Fitbit Health Solutions grew 17%, underscoring the strength of the Fitbit brand.”

2019 2018 Change
Total Revenue 1,434.8 1,512 (5%)
Net Income (120.8) (320.7) (264%)
Devices Sold 16 13.9 15%
Monthly Active Users (MAUs) 29.6 27.6 7%

Figures in millions (US$)

The full year financial measurements are clearly not heading in the right direction, though part of this can be attributed to the average selling price of the devices decreasing 17% to $87. This trend is thanks to the decision to introduce more accessible and affordable devices, increase the range of devices and various promotions or offers.

Perhaps the most important statistic to note here is the number of devices sold over the period. This is up 15% on 2018, while 61% of sales came from completely new customers. For the repeat customers, 54% came from customers who were inactive during a prior period meaning Fitbit is re-engaging those it might have lost as well.

Google might have spent $2.1 billion to acquire the Fitbit business, but it was highly unlikely going to be driven by the direct revenues it would achieve. $1.434 billion is nothing to turn you nose up at, but it is a drop in the ocean if Google can scale wearable devices in the same way it has done to smart speakers.

Prior to the entry of Google and Amazon, the smart speaker segment was sluggish. Adoption was almost non-existent, and interest was even lower. But in introducing their own, more affordable, devices and very cash-intensive advertising campaigns, these two internet giants drove up engagement and sales, whilst also forcing competitors to create their own products.

Looking at the final quarter of 2019, Strategy Analytics estimates that 55 million devices were sold globally, with Google collecting a 24.9% market share. Others are catching-up, but that won’t bother Google.

The more smart devices which are in the world, the more opportunity there is for Google to own the platform which services are build on and through. Android extends the Google influence into the smartphone world, the smart speaker gives it a voice interface in multiple rooms in the home and Wear OS is a version of Google’s Android operating system designed for smartwatches and other wearables.

From here on forward, pay a bit of attention to the financials of Fitbit, but be more interested in the number of devices which are being sold and the number of customers who are signing up to not only Fitbit’s health monitoring services, but also Google’s. This is a new data treasure trove for Google and a further opportunity to monetize digital lifestyles through a new interface.

Philips files wearables patent complaint against Fitbit and Garmin

The US International Trade Commission (USITC) has said it will formally kick-off an investigation into Fitbit, Garmin and other parties, following a patent complaint from Philips.

Although the original filing was made last month, the probe into now Google-owned Fitbit, Garmin, Ingram Micro, Maintek Computer and Inventec Appliances can now begin after a vote from the USITC. Philips has suggested the parties have violated three of its patents in health monitoring and smart watch products.

Details might be a bit thin on the ground, though the three patents which Philips believes are in violation are:

  • US Patent No. 7,845,228: Activity motion tracking
  • US Patent No. 9,820,698: Actigraphy methods and apparatuses
  • US Patent No. 9,717,464: A continuous transdermal monitoring system
  • US Patent No. 9,961,186: A Personal Emergency Response System (PERS) system which is not confined to the individual’s home

Although Garmin and Fitbit are well known for their notable presence in the fitness wearables market, Philips has carved its own niche in the highly lucrative healthcare space. It might not be as ‘sexy’ a segment, but it can prove to be incredibly profitable, especially in a market such as North America where private insurance rules the roost.

Philips does have a presence in the consumer wearables space and has even launched a few smart watch products of its own, but these are considerably less successful that the Fitbit or Garmin alternatives. Success matters very little when it comes to patent violations, and Philips has requested the USITC block the import of the devices in question.

What is worth noting is this is not the first instance of bad blood between Philips and Fitbit.

During July 2019, Philips filed another patent infringement case filed in Massachusetts Court focusing on four different patents. These patents related to GPS, the security of data during transmission and fitness related applications. In this example, Philips claimed to have informed Fitbit about the violation, but the US firm did not respond to licensing calls. This case is on-going.

Google pushes further into hardware world with Fitbit purchase

Google has announced it has entered into a definitive agreement to acquire wearables brand Fitbit as it further explores its options in the hardware segments.

While wearable fitness devices are certainly a long-slog away from Google’s core competencies, it has already shown it is able to gain traction in the hardware segments with the success of its smart speaker. With the Pixel smartphones, smart speakers, Chromebook, the Nest Thermostats and now Fitbit, Google is certainly spreading its wings.

“Three and a half years ago, I joined Google to create compelling consumer devices and services for people around the world,” said Rick Osterloh, SVP of Devices & Services.

“Our hardware business is still relatively young, but we’ve built a strong foundation of capabilities and products, including Pixel smartphones and Pixelbooks, Nest family of devices for the home, and more.

“Google also remains committed to Wear OS and our ecosystem partners, and we plan to work closely with Fitbit to combine the best of our respective smartwatch and fitness tracker platforms. Looking ahead, we’re inspired by the opportunity to team with Fitbit to help more people with wearables.”

Although this has been a rumour which has been circulating for a while, it certainly looks like a sensible move for the internet giant. This is another example of Google doing what Google does; throws money at an idea which it likes.

The core Google business model is a relatively simple one. Its services are some of the best available, however to continue growth it needs to ensure these services are being pushed into new ecosystems. For example, it started as a desktop application, before buying Android and dominating the mobile space, then when the voice user interface started to gather steam, it brought out a range of smart speakers. Each of these moves takes the core Google services into a new domain, and Fitbit is no different.

The wearables segment has constantly promised the world but delivered only a fraction, though there does seem to be gathering momentum. Smart watches and other wearable devices are becoming more popular, and it does offer Google another opportunity to interact with the consumer in a different environment.

Google currently has a voice assistant which allows for the voice user interface, Fitbit devices will soon enough be powered by Google’s Wear OS, while it has been doing some promising work in gesture control also. These elements would all link back to Google’s other services, such as the Mapping product or search engine. Fitbit looks like an attractive investment because it offers Google another opportunity to make money in another domain.

Despite being an incredibly sound brand, Fitbit has been suffering in recent years. It found fame and success in delivering a niche wearable device for fitness enthusiasts, though as the wearables segment slowly evolved, it did not. Other more complex devices evolved to offer fitness elements, stealing some of the shine from the Fitbit. Its own attempts to create smart watches have been hit and miss.

Fitbit does need to evolve its product beyond the niche fitness devices which it produces today, but to develop something which is competitive in a market with the likes of Apple, it will take cash. Fortunately, this is something Google can contribute with abundance. However, Google will have to make sure it lets Fitbit be Fitbit.

Google will have to make sure it leaves the Fitbit team on its own to hire the right people and design the right products. Google’s heritage is in software after all and wearables need to marry substance and style. We suspect a horde of software engineers might not be the best suited to get too involved.

Should Google leave the Fitbit team to create an excellent product, just like it left Nest on its own, and marry the devices to its wider service ecosystem, this could be a very crafty acquisition.

Google reportedly bids to acquire Fitbit

As Apple continues to progress in the wearables market, Google parent Alphabet is rumoured to be looking at buying Fitbit.

The goss comes courtesy of Reuters, which has been hanging out with people who reckon they have inside knowledge of the matter. The story had almost nothing else to say on the matter, other than it not being a done deal yet and somewhat redundantly stressing that it’s sources are anonymous because they don’t want to be sacked for leaking stuff.

Stories like this often come from official, but clandestine channels with one or both of the companies in question. One reason for the acquiring company to do such a things is known as a trial balloon, in which it leaks a rumour to see how the market reacts. In this case Fitbits shares were up 27% at time of writing, but that’s probably just in anticipation of the typical premium paid for an acquisition. Perhaps more telling is the fact that Alphabet’s chares are up 2-3% on the rumour.

Google tends to buy device companies to contribute to the associated ecosystem around them, rather than a strategic aim to develop that line of business as a profit centre in its own right. The Android wearables market seems to have stalled, while Apple makes steady progress, so maybe Google had decided it’s time to intervene. Then again this could be a false alarm, in which case anyone who flogged their Fitbit stock today will be feeling pretty smug.

Apple continues to command the smartwatch market – report

Analysts believe Apple has increased its smartwatch shipments by 50% to capture a bigger share of an expanding market. The gap between the Apple Watch and the chasing pack is widening.

Unlike the contracting smartphone market, the smartwatch market is still experiencing fast growth, although the absolute volume is still small. According to data published by the research firm Strategy Analytics, 12.3 million smartwatches were sold in Q2, up by 44% from 8.6 million a year ago.

5.7 million pieces of Apple Watch were shipped in the quarter, up by 50% from 3.8 million in the same quarter last year, giving Apple, the run-away market leader, a 46.4% market share, up from 44.4%. The biggest market share gain, however, was registered by Samsung. The Galaxy Watch maker more than doubled its volume to 2.0 million from 0.9 million in Q2 2018 and took over the number two position on the leader board with a 15.9% share. Samsung’s gain was primarily at the expense of Fitbit, which saw its market sharing plunging from 15.2% a year ago to 9.2%.

“Fitbit has struggled to compete with Apple Watch at the higher end of the smartwatch market, while its new Versa Lite model has struggled to take-off at the lower end,” Neil Mawston, Executive Director at Strategy Analytics, commented on the competition dynamics. “Fitbit will have to move fast to execute a recovery, because Samsung, Garmin, Fossil and other competitors are keen to grab a slice of its valuable health and fitness customers.”

The research firm does not publish the value and value share of the smartwatch market, but it should be safe to estimate that Apple’s leading position would be more commanding if calculated in monetary terms, considering that Apple Watch is generally priced 40% higher than the Galaxy Watch with similar features, which in turn is generally more expensive than the smaller competitors.

Smartwatch market Q2'2019 SA

Although Apple does not break down sales income to product lines, “Wearables, Home and Accessories”, the business unit that includes the Watch, reported the highest growth (+48%) among all the business units in Apple’s Q2 results, and has overtaken the total revenues from the iPad unit.

Tim Cook, the CEO, is also banking high hopes on the Apple Watch for future growth. In a January interview by CNBC, Cook claimed the Apple Watch has democratised health care. “We are taking what has been with the institution and empowering the individual to manage their health. And we’re just at the front end of this,” Cook said. “But I do think, looking back, in the future, you will answer that question: Apple’s most important contribution to mankind has been in health.”

Fitbit fights back at Apple in the smart watch market

The latest smart watch numbers from analyst firm Counterpoint reveal Apple is still the dominant player but Fitbit is giving it a run for its money.

Total global smart watch shipments grew 37% year-on-year but it’s rapidly turning into a two horse race. Apple hijacked the market as soon as it took the segment seriously but its initial success seemed to stall. Meanwhile Fitbit more recently made the strategic decision to diversify beyond fitness bands and that move seems to have paid dividends.

Apple still dominates with a 41% of global shipments, but that’s down from 48% a year ago. Meanwhile Fitbit has managed to propel its share from 8% a year ago to 21% in Q2 2018, thanks to the apparently popular Versa smart. Everyone else is miles behind, with one-time leader Samsung now bordering on irrelevance.

Counterpoint smartwatch Q2 2018 1

“Back in Q4 2017, Apple stepped up its strategy in the smartwatch segment by enhancing the features of smart watches into broad-based functionalities, including some health and fitness tracking capabilities,” said Satyajit Sinha of Counterpoint. “Moreover, Apple is catalysing the trend of ‘smart watch as a standalone wearable device’ with adoption of cellular connectivity, which is driving the new wave of cellular connected wearables globally, great news for mobile operators.”

It doesn’t look like the market got the memo about standalone smart watches, however. As Sinha’s colleague Neil Shah notes, people seem reluctant to pay the premium just for the opportunity to talk to their wrist like a nut-case.

“Despite initial hype and traction of cellular based Apple Watch Series 3 in the first two quarters, Apple iPhone users are actually choosing the Series 1 as a non-cellular option over Series 3 non-cellular model which is surprising to many industry watchers,” said Shah. Not all industry watchers mate. The strong inference here is that Apple hasn’t done much to improve on the Series 1 other than whack in an expensive and largely redundant modem.

As indicated the Apple Watch Series 1 is the best selling model, followed by the Fitbit Versa. Given that Chinese vendor Amazfit has the third best selling brand despite only having a 4% total market share, that implies these two models are by far the biggest sellers. Unsurprisingly the Fitbit Versa is significantly cheaper than any Amazon Watch, so it wouldn’t be surprising to see it continue to grab share in the coming quarters.

Counterpoint smartwatch Q2 2018 2

Maybe Fitbit can be more than just a niche exercise product

Fitbit might not be turning in the results of yesteryear, but riding the wave of Versa to beat analyst expectations demonstrates there might be mass-market appeal for the brand.

Total revenues stood at $299.3 million for the three months ending June 30, and while this is still considerably down on the $353.3 produced in the same period for 2017, it beats expectations from analysts. The success for this period has been attributed to Versa, the team’s attempt to break away from the fitness-tracking niche and enter into the mainstream smartwatch market.

“Our performance in Q2 represents the sixth consecutive quarter that we have delivered on our financial commitments, made important progress in transforming our business, and continued to adapt to the changing wearables market,” said CEO James Park.

“Demand for Versa, our first ‘mass-appeal’ smartwatch, is very strong. Within the second quarter, Versa outsold Samsung, Garmin and Fossil smartwatches combined in North America, improving our position with retailers, solidifying shelf space for the Fitbit brand and providing a halo effect to our other product offerings.”

Overall, Fitbit sold 2.7 million wearable devices across the quarter, with the average unit price increasing 6% year-on-year, primarily down to the newer product releases. Those devices released in the last twelve months accounted for 59% of total revenues, providing confidence in the brands ability to diversify from the niche which has served it so well through the underwhelming years for wearable devices.

Fitbit launched the Versa on 16 April and boasted about selling one million devices just over one month later. The product is more in-line with what you would have expected from a smartwatch device, moving beyond the fitness tracking niche Fitbit has become known for. Just looking at the device demonstrates the shift, though what’s on the device is what counts, as it features all the apps we have become accustomed to. It is a big move from Fitbit, and it looks to have worked.

Perhaps this is a positive sign for the wearables industry on the whole. For years, Fitbit appeared to be the only wearables brand which could survive as devices failed to meet the expectations of consumers. Maybe the consumer was not ready for the wearables craze, but the simplicity of Fitbits fitness trackers worked. In being able to move out of the niche and into mass-market appeal, this might be a sign the general public is ready to embrace wearables on the whole.

Looking at the share price, it is still way down on the peak from 2015, some 87%, but there have been signs of recovery across 2018. There is a notable dip in the last 5-6 weeks, though should Fitbit be able to maintain this venture into the mainstream market, we can only see the share price going up.

Fitbit Shareprice

Somehow Fitbit continues to make the wearables market work

While everyone else seems to struggle to make any money in the floundering wearables market, Fitbit has boasted of shipping more than one million Versa devices since general availability began on April 16.

Fitbit’s Versa smartwatch has been marketed as a ‘personalized daily health and fitness companion’, featuring an on-device health dashboard, tetherless connectivity, mobile payments, Android quick replies and healthy battery life. Aside from having a use which is appealing to a niche, but dedicated demographic (fitness and health fanatics), pricing the product at $199.95 makes Versa accessible. With more than one million shipments inside seven weeks, it seems Fitbit might be onto another winner after a couple of difficult months.

“With Fitbit Versa, we are delivering on our promise to offer a true mass appeal smartwatch with engaging new features,” said James Park, CEO of Fitbit. “The positive response to Versa shows that we are filling this void and well positions us to gain share of the fast-growing smartwatch market.”

Despite Park’s positivity, the company has been struggling in recent months. The firm announced sales of $247.9 million for the quarter in May, and while this number was up on analyst expectations, it was short of the $298.9 million generated during the same period of 2017, and even further behind the $505.4 million in Q1 2016. Fitbit had defied the trends in the wearables community for years, but it seemed time had caught up. That said, the numbers being quoted for the Versa device seem to offer hope.

For years Fitbit has seemingly been one of the few companies who was able to make headway in the struggling wearables market. In truth, the technology was not, and probably still isn’t, ready. Standalone connectivity was a big step forward last year, if a device was tethered to a phone what was the point, but the simplicity and niche appeal of the Fitbit exercise devices made it a lucrative venture for the team.

Another positive move for the team seems to be the launch of a new female health tracking feature, which has been downloaded by 2.4 million users. Entering into the services market is certainly a good move for Fitbit, as the last six months have shown how dangerous the product market can be; Versa was needed to recapture momentum, though recurring revenues through apps is a sensible supporting revenue stream.

This is not the moment of euphoria for wearables, Nokia’s plight with Withing’s demonstrates Fitbit is the exception not the rule. The product is still reliant on the development of other technologies before it becomes a genuine feature of the connected economy. Standalone connectivity was an important step forward, but the voice interface will be another one, as will eSIMs, gesture control and specific connectivity plans for the devices.

Fitbit might be able to make this space work right now, but there is still some way for everyone else.