Companies’ Overview


Google is an American technology company founded in 1998 by two PhD students from Stanford University, Larry Page and Sergey Brin.

After the launch of its search engine, Google rapidly expanded through the sale of online advertising and became a listed company on the Nasdaq in 2004. Google continued its growth through several acquisitions including Android (2005), YouTube (2006), Motorola Mobility (2011) and Waze (2013).

In 2015, Google’s corporate restructuring led to the creation of Alphabet, which became the parent company. Currently, Alphabet offers a variety of products ranging from advertisement services to smartphones and Google is now the most visited website in the world, with around 5.6 billion searches per day.

From 2004 until 2011, Google’s CEO was Eric Schmidt, who replaced Larry Page, co-founder, who was made to step-down by angel investors.

In 2011, Mr. Page was reinstated as CEO of Google. By then, Google had grown to over 24,000 employees and more than $180 Billion of market capitalization. In 2015, Mr. Page became CEO of Alphabet whilst Sundar Pichai, former product manager at Google, became CEO of Google. Recently, Mr. Pichai has been facing an antitrust investigation into Google. Google’s acquisition of Fitbit is likely to further increase scrutiny of their activities.


Fitbit is an American technology company founded in 2007 by James Park and Eric Friedman. The Silicon-Valley based company is considered a pioneer in the wearable technology industry as it offers watches that enable customers to track their physical effort and food consumption daily.

In 2015, Fitbit IPOed on the NYSE, the opening price was $30.50 per share, but after less than one year it plunged to the $7 – $4 range.


Fitbit is struggling whit its financials performances as well, in fact the company has recently released its quarterly results, posting declining revenues, – 11% compared to 2018, and a $52bn third-quarter loss.

Fitbit’s negative performances are not new to the market; indeed the company has had a decreasing pattern for Revenues and Ebitda.


The reason behind the unappealing results is the increase of competition in the fitness tracker market, in fact tech giants have saturated the market with both affordable tracker (Xiaomi, Garmin) and pricier smartwatches (Samsung, Apple).

James Park, co-founder of Fitbit, has been the CEO of Fitbit for the last 12 years. Mr. Park led rounds of funding that added SoftTech and TrueVentures, amongst others, to the stakeholders. The acquisition by Google could see Mr. Park remain in his position, whilst benefiting from the infrastructure and resources of the tech giant to further expand the company.


Industry Overview

Wearable technology integrates electronics to the daily activities. From smart wristwatches that record heart rates to intelligent bands that track physical activities, wearable technology in the form of fitness monitoring devices attract increasing attention from health-conscious consumers.

The wearable technology market is expected to increase at a CAGR of 17% over the forecast period 2019-2024 and will reach a size of $56,8bn by 2025.

Driving factors of the growth include:

  • Changing consumer lifestyles and shift toward fitness
  • Need for advanced technologies for healthcare and security applications
  • Preference for sophisticated gadgets

Innovation and competition have led to a rapid development of new products, most of which consist of smartwatches, head-mounted displays, wristbands, ear-wearable devices, smart clothing. Those products are applicable in many sectors such as: Sport, Healthcare, Security applications, Entertainment, Enterprise and Industrial.

Smartwatch category is experiencing a boom, with more than 141 million units sold in 2018, compared to the 5 million units sold in 2014.

Despite smartwatches represent the vast majority of the wearable devices market, 63% share, ear-worn devices experienced the fastest growth in 2018, 135.1% year over year, and accounted for 34.6% of all wearables shipped in Q1 2019.

Healthcare is the industry where wearable technology finds the vast majority of applications, in fact:

  • Smart clothing is revolutionizing the healthcare practices, it’s expected that the growing adoption of smart clothing to monitor health or help with treatment could reduce reliance on costlier equipment
  • R&D investments in wearable textile-based personal systems increased over the last years as healthy lifestyle gained strong interest
  • The demand for smart fabric in healthcare will grow exponentially due to the increase in chronic disease cases in key matured healthcare markets such asthe United States and Europe

Tech companies that develop smart wearable products collect a considerable amount of data on heart rates, body temperature, and the like. Henceforth, it’s logical for them to find ways to generate revenuefrom the collected data by partnering with health-care companies to monitor chronic conditions among users and developing new health care services.

For instance, Fitbit has recently launched a partnership with Bristol-Myers Squibb Co. and Pfizer Inc. who will use its technology to help detect and diagnose atrial fibrillation in wearers at risk of stroke.

The potential downside of this situation is that customers will be inundated with clinical alerts, such as Apple Watch’s atrial fibrillation alert. If those alerts are specific enough, they can help identify undiagnosed medical conditions. However, these alerts have very high false-positive rates and could drive unnecessary visits.

The market appears to be pretty consolidated, top 5 major player in the market are Apple, Xiaomi, Huawei, Samsung, Fitbit and retain 65.7% of market share 




Deal Drivers

Google’s battle in the hardware field dates back to the early days when it tried to fight the giants of Apple and Samsung.

In 2007, Google announced that it would leave smartphone production industry to the vast ecosystem of Android device manufacturers. But in 2011, Google made a late entry in the market with the acquisition of Motorola for 12.5 billion dollars. However, it failed to make a scalable business and in 2014, sold Motorola to Lenovo for 2.9 billion dollars.

The goal of the Fitbit acquisition, however, is not only to fill a hardware gap, but it will open a window on a health sector worth $3 trillion. All Fitbit devices are collecting data, and this is a potential opportunity for the health industry and so for Google which specializes in creating data tools, profiting from them and providing services.

At the same time, Google hopes that the move will help strengthen its efforts in the Wear Operating System. Introduced in 2015, WearOS is designed to help Google bring Android into products like smartwatch and fitness trackers. Unlike Apple Watch, however, Google’s platform has so far failed to reach consumers, despite attracting several high-profile partners such as Fossil, Michael Kors and Movado. While Fitbit’s software is solid it will be interesting to see how long Google keeps Fitbit separate or if it tries to integrate its applications into Android


Deal structure

Friday 1stNovember Fitbit announced that entered a definitive agreement to be acquired by Google.

Google will pay approximately $2.1bn (1,5x price to sales) for the wearable’s maker, around $7.35 per share in cash. The purchase price represents a premium of more than 70% from where Fitbit’s stock was trading before reports of deal talks leaked.

The deal could grant Google a big boost in a market where it has lagged compared to its peers as it’s acquiring Fitbit’s assets as well its users’ data such as health and location information.

On the other hand, there are rising concerns about what Google intends to do with the data Fitbit users have shared over the years. Both companies stressed that they will not be used for Google ads, moreover Fitbit’s CEO stated on Friday that “Strong privacy and security guidelines have been part of Fitbit’s DNA since day one, and this will not change. Fitbit will continue to put users in control of their data and will remain transparent about the data it collects and why”

As part of the deal Google has agreed to pay $250M to Fitbit if it can not secure regulatory approval.



Qatalyst Partners LLP acted as financial advisor to Fitbit, and Fenwick & West LLP acted as legal advisor. Alphabet’s financial advisors were not disclosed.


Sources and References: Companies’ reports, WsJ, Financial Times, Thomson Reuters, Bloomberg, International Data Corporations, NY Times, .

To contact the authors:

Giuseppe Tricarico

Fabio Simpson

Andrea Gaffuri