What time is it? Time for something interesting to happen in the smartwatch market.
Yes, just a few days ago Google bought the smartwatch and fitness tracker maker, Fitbit. This was very unexpected news. Why? Because most people thought Google had given up on the wearables market. The company’s operating system – Wear OS – had been a flop. Google hardly ever talked about the platform any more.
But here it was, spending a huge $2.1 billion on the world’s second biggest wearables company.
What’s going on?
Before we dig into that, let’s re-cap how the wearables market got started.
It’s hard to pinpoint exactly when this happened. But there was one landmark moment in 2012.
That was when a small company called Allerta launched a Kickstarter campaign was for a smartwatch called Pebble. There was such demand that Allerta raised more than $10m.
The success of the campaign suggested the public was finally ready for wearables. Why ‘finally’? Because the concept was not new. In fact, Microsoft tried to introduce it nearly a decade earlier. In 2004, it launched a project called SPOT, or Smart Personal Object Technology. It charged a yearly subscription to get info sent over the air to small connected devices, including smartwatches.
Microsoft was too early. But by 2012, things were different. iPhone and Android had been around for four or five years. 3G was well-established. People were getting used to portable, connected devices.
Pebble was a big success – for a while. It wasn’t the only one. Jawbone and Fitbit and Withings and more all grew fast. Meanwhile, ‘conventional’ watchmakers such as Tag and Fossil also experimented with smart tech.
Then, in 2014, came another big change. This was when Apple entered the market with its Watch. Apple had big plans for its first wearable. It wanted the Watch to be more than something that pinged whenever you got an email. It wanted it to be more like an ‘iPhone for the wrist’.
At launch, Tim Cook, Apple’s CEO, said: “Apple Watch begins a new chapter in the way we relate to technology…We can’t wait for people to start wearing Apple Watch to easily access information that matters, to interact with the world, and to live a better day.”
At around the same time, Google unveiled Android Wear (later re-named Wear OS). It believed it could repeat the Android model for phones in the wearables space. In other words, make free software that other companies could use to quickly build watches.
Neither Apple Watch or Android Wear went as planned.
Wear OS was the bigger failure. The watches weren’t very good. They didn’t sell well. And Google seemed to lose interest in the platform. By 2017, it had stopped talking about Wear OS at its annual developer events. Meanwhile, companies such as Samsung abandoned Wear OS in favour of their own platforms.
As for Apple, people simply didn’t use the Watch as some kind of ‘remote control’ for life. They used it as a fitness tracker like all the other wearables on the market. As a consequence, in 2017, Apple quietly changed its strategy and began promoting the Watch as a sports and fitness aid.
Even though Apple backtracked, and certainly didn’t sell as many Watches as it hoped, it still dominated the opposition.
According to Strategy Analytics, Apple shipped 22.5 million Apple Watch units during 2018. That was around half of all the smartwatches sold (Fitbit sold 5.5 million units, Samsung sold 5.3 million and Garmin 3.2 million).
Apple’s dominance put pressure on competitors. So did cheap Chinese alternatives. Xiaomi’s MiBand, launched in 2014, cost just $15. As a result, Jawbone closed in 2017 while Pebble shut down in 2018.
By the time 2019 rolled by, the smartwatch market was looking pretty uninteresting. Then came that Google/Fitbit deal.
So, to get back to the main point. What is Google planning?
The obvious answer is to make its own watch. Google has established Pixel as a successful phone and laptop brand. But until now, no wearable. Surely a Pixel watch is next.
Then there’s data. Google is hardly a search engine any more. It’s a machine learning company.
Its systems analyse data to enhance various Google services: to make better maps, speed up language translations and improve ad targeting. With access to Fitbit’s 28 million users – and millions more future users – Google will have access to petabytes of bodily data too.
This might raise privacy concerns. But if Google can overcome them, this is powerful data with which to develop new healthcare expertise/products.
The last reason is to prepare for the future. Some experts think that the successor to the smartphone will not be one product. It will be a family of products working together – a watch, bluetooth earphones, maybe eyewear – all controlled by speech.
If this happens – and it’s a big if – Google needs to be ready. If not, well Fitbit only cost $2.1 billion. Google can easily afford that.