Fitbit – Sold out.

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Google alliance shutters ecosystem aspirations.

• With one stroke of the pen, Fitbit has most likely consigned itself to becoming yet another long-suffering hardware maker hanging off Google’s apron strings.
• Fitbit has entered into an alliance with Google where Fitbit will use the Google Healthcare API to get access to the health system and have the data its wearables generate accessed by doctors and hospitals.
• In addition, Fitbit will move all of its operations onto Google Cloud which will allow it to scale more quickly as well as get access to Google’s best in class AI systems.
• While this will help Fitbit in the short-term, it effectively marks the end of any ecosystem ambitions that Fitbit might have had and is exactly what it tried so hard to avoid when it declined to use Apple’s HealthKit API.
• The net result is that Fitbit goes from being a potential aggregator of wellness information to merely a provider of data that will then be aggregated and understood by Google rather than Fitbit.
• This is a win for Google, as Fitbit has good share of health trackers after the Apple Watch and now it will be in a position to aggregate Fitbit data into the other data that it collects.
• RFM research has long shown that when different pieces of independent but related data are put together, far better insights can be gleaned, making data in aggregate far more valuable than the sum of the individual pieces.
• This is the value that Fitbit has now conceded to Google and why I think that in the long-term, this marks the end of any real value that Fitbit may have been able to create for its shareholders.
• This relationship is not exclusive and Google will now be able to bring in data from other wellness monitoring devices to compliment that which it will be getting from Fitbit.
• Hence, patients and doctors will now ascribe value to Google rather than to Fitbit which I think in the long-run will reduce Fitbit into a seller of commodity hardware.
• This is pretty much what has happened to the long-suffering makers of Android smartphones
• If it can develop health monitoring sensors that can collect more accurate data, this will give it an edge but not one that is likely to last for very long.
• Fitbit tried so desperately this scenario with HealthKit and I see it as a signal that the company has given up on its long-term health related ecosystem ambition.
• It also makes Fitbit a potential tuck-in acquisition for Google, if and when it becomes so commoditised that it struggles to make ends meet.
• It is at that point that Google may swoop in to pick-up what is left on the bones at a fraction of the current value.
• Hence, this alliance with Google does not tempt me in any way to consider a position in Fitbit.