The big picture: Thirteen years from the launch of its first wearable, Fitbit agreed to move under the Google umbrella to help the latter get a leg up in the fitness and wellness market. During a recent interview, co-founder and CEO James Park revealed the company's premium health and fitness service had already surpassed 500,000 users and talked about the challenges it faces moving forward.
Fitbit started its life in 2007, when James Park and Eric Friedman saw the opportunity of using sensors to create small wearable devices that could help you keep track of your activity levels and become more fitness-focused. The company has had a bumpy journey marked by several moments of financial trouble, but somehow still managed to remain among the top five wearable makers worldwide.
Today, tech giants such as Apple, Google, Amazon, Samsung, and many others compete in the space, with Apple leading the bunch and raking in more money with its Apple Watch than the entire Swiss watch industry. Google has repeatedly tried to create an alternative ecosystem based on what is now known as Wear OS, but ultimately failed to command the same success.
But while these companies have tried different recipes, Fitbit has mostly been focused on the health and fitness segment, with the notable exceptions of two smartwatches -- the Ionic and the original Versa. With the Versa 2, the company learned from those mistakes and pivoted to focus more around the software and services aspect of its products.
In a recent interview with the Wall Street Journal, co-founder and CEO James Park revealed that Fitbit Premium, which launched alongside the Versa 2, has over 500,000 paying subscribers. Park expected demand for the service to go down during the pandemic, "but then we started to see that people were looking to Fitbits as a way, along with other things like Peloton, to stay home, quarantine and stay healthy. [...] It has been a surprise for us that ironically business is doing better than we anticipated due to the pandemic."
Google bought Fitbit for $2.1 billion last year, in an attempt to bolster its hardware business and breathe more life into Wear OS. The move makes sense, since Fitbit already uses Google Cloud to power its services, but regulators in the EU and the US are still on the fence about greenlighting the deal.
Park is confident the transaction will close later this year, and noted that "Google has incredible resources. The combination of the two companies has the potential to have a profound impact on the course of health care." As for the Fitbit brand, he expects it will be treated just like Nest and YouTube, both of which resonate with people around the world. Not only that, but Fitbit would continue to operate as if it were an independent company with its own operating plans and product roadmap.
The issue of privacy under the Google umbrella is a hotly-debated topic, but Park says "we’ve always had a policy where we never sold and shared data with third parties, and only share data with your opt-in consent. [...] Google recognizes the importance of making sure that this data is held securely and that privacy protections are put in place. If you can’t ensure the privacy of the data, no one’s going to want to use your devices. I think everyone’s interest is well aligned, and Google has also publicly stated that this data is never going to be used for the purposes of their search advertising."
When asked about the Fitbit's strategy moving forward, Park explained the company would continue to nurture innovations around health and fitness. Another key focus will be to improve its subscription service and keep users of Fitbit devices engaged instead of relying strictly on device sales to drive the bottom line.
Part of that strategy will involve tapping into the growing popularity of telemedicine and convincing consumers that it's worth it to invest in tools like a connected thermometer or an otoscope to "give your physician that same level of insight that they might get when you go in for an in-person visit."
Then there's the possibility of using Fitbit devices to detect Covid-19. Earlier this year, a study conducted in partnership with the Stanford Medicine Healthcare Innovations Lab and Scripps Research Translational Institute revealed that a carefully developed algorithm could successfully detect Covid-19 in users a day or two before they showed symptoms.
Park is "cautiously optimistic" about the findings, which add to earlier success seen with influenza detection in a trial of over 100,000 people. The executive believes this method "in conjunction with regular testing [...] can have a profound impact on the ability for public health and affect the transmission of the disease." It could also help companies manage the productivity impact on their employees, as they navigate through the pandemic.
However, since the technology is still pending regulatory approval, the only way to fast-track it relies on a process called emergency use authorization. Park explained that "it’s going to be backed by a lot of data through trials that are being conducted pretty rigorously. The FDA in general has been receptive obviously to very data-driven proposals."