FIT - Google's Fitbit Acquisition Is All About Apple
Google has agreed to acquire Fitbit (NYSE: FIT) for $2.1 billion in cash. The move will give the Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary a foothold in the wearables market, an area it's been trying to develop for several years now by licensing Wear OS, a smartwatch operating system based on Android. Fitbit accounted for roughly 10% of smartwatch shipments in the second quarter, according to data from Strategy Analytics.
Still, everyone trails the market leader, Apple (NASDAQ: AAPL), by a wide margin. Apple Watch accounted for 46% of smartwatch shipments in Q2, and helped push the tech titan's wearable segment revenue 54% higher in its fiscal fourth quarter to $6.5 billion.
Importantly, Apple's wearable sales give consumers a reason to choose iOS over Android when it comes time to upgrade their more expensive hardware. That's something Google wants to combat.